Orient Securities·2026-03-07 08:51Investment Rating - The report maintains a "Positive" outlook for the banking sector in 2026 [5] Core Insights - The banking sector is expected to return to a fundamental narrative in 2026, supported by policy financial tools, with resilient asset expansion despite being in a deposit repricing cycle that may stabilize net interest margins [3][9] - The report highlights two main investment themes: 1. High-quality small and medium-sized banks with solid fundamentals, recommending Nanjing Bank (601009, Buy), Ningbo Bank (002142, Buy), and Chongqing Rural Commercial Bank (601077, Buy) [3] 2. Large state-owned banks with stable fundamentals and good defensive value, recommending Bank of Communications (601328, Not Rated) and Industrial and Commercial Bank of China (601398, Not Rated) [3] Summary by Sections Economic Outlook - The GDP growth target for 2026 is set at 4.5%-5%, slightly down from the previous year, reflecting a balance between structural adjustments, risk prevention, and growth stabilization [9] - Fiscal policy is expected to maintain a moderate expansion, with a fiscal deficit rate of 4% and a total of 4.4 trillion yuan in special bonds planned for the year [9][10] Monetary Policy - The monetary policy will continue to adopt a moderately loose stance, with potential for timely adjustments in reserve requirement ratios and interest rates [9] - The report anticipates that the cost of liabilities will improve, while the asset side will experience limited re-pricing effects, leading to a positive outlook for net interest margins [9] Risk Management - Ongoing efforts to mitigate risks in key areas such as real estate and local government debt are expected to support the stability of bank balance sheets [9] - The report emphasizes the importance of managing risks associated with real estate and local government debts, with a focus on financial and fiscal support [9]