Group 1: Bank Liability Pressure - Since the second half of 2024, listed banks have shown stable asset expansion, primarily driven by a recovery in deposit growth, with a notable increase in bond and interbank financing[2][14]. - The structure of deposits has shifted, with personal deposits growing faster than corporate deposits, leading to an increase in the proportion of personal deposits in listed banks[2][20]. - Large banks face relatively greater pressure on their deposit growth compared to smaller banks, as their deposit structure is more balanced but has been significantly impacted by the cessation of manual interest supplementation in April 2024[2][26]. Group 2: Financial Investment Trends - The importance of financial investments has increased, with banks actively increasing their financial investments in response to rising interest rate spreads[3][34]. - Different types of banks exhibit varying preferences for trading and investment accounts, with rural commercial banks showing a higher trading attribute compared to state-owned banks[3][40]. - The contribution of financial investment to income has shown volatility, with a negative correlation observed between the 10-year government bond yield and the income contribution from financial investment trading[3][51]. Group 3: Net Interest Margin Dynamics - The net interest margin (NIM) is primarily influenced by the yield on interest-earning assets and the cost of interest-bearing liabilities, with the latter being more rigid[4][59]. - Recent trends indicate that the decline in loan yields and the rise in deposit costs have been the main factors compressing NIM in recent years[4][73]. - The central bank's monetary easing can temporarily boost NIM by lowering interbank financing costs and improving asset yields through enhanced investment and consumption willingness[4][74].

1. Report Industry Investment Rating - The industry investment rating is Neutral (expected to perform within ±5% of the CSI 300 Index in the next 6 months) [100] 2. Core Viewpoints of the Report - The essence of the bank's net interest margin is the return on capital investment, with a cycle of 5 - 9 years. The main influencing factors are technology, capital, labor, corporate organizational efficiency, and the whole - society distribution relationship. In the long run, improving social distribution relations, increasing the KTI value - added ratio, and enhancing the unit output of labor through education to increase the proportion of high - value - added KTI services are effective. Monetary policy can significantly improve the real - economy's capital cost in the short cycle and boost the bank's net interest margin, but it won't affect the long - term trend [3][70]. - Economic short - cycle fluctuations can temporarily increase the bank's net interest margin under the following conditions: continuous 200BP reduction in policy rates, bottoming - out and recovery of both the real - estate and export - manufacturing sectors, and continuous improvement of leading indicators such as PPI turning positive and M1 year - on - year growth exceeding nominal GDP growth and maintaining this for at least one quarter [70][72][73] - Since 2020, the policy rate has been transmitted efficiently to the bank's asset side but poorly to the liability side, mainly due to the rigidity of deposit prices. To achieve "neutral" interest rate cuts, it is necessary to reduce the proportion of time deposits, crack down on high - interest deposit - soliciting, formulate a scientific loan - scale assessment mechanism, and maintain a necessary interest - rate cut rhythm [4][80][91] 3. Summary According to the Directory 3.1 What is the Essence of the Bank's Net Interest Margin? - The net interest margin is the ratio of a bank's net interest income to all interest - earning assets, a key indicator of a bank's profitability. It can be regarded as the return on debt - type capital investment. In a country, the trends of equity and debt investment returns are consistent [13] - The yields of Chinese and US government bonds are basically synchronized with ROIC, reflecting a country's capital return. Currently, China's government bond pricing matches the fundamentals, while US government bonds are attractively valued relative to the fundamentals [17] 3.2 What Factors Are Related to the Bank's Net Interest Margin? 3.2.1 Cycle - The cycle of the bank's net interest margin may be 5 - 9 years. Since 2006 in China and 1992 in the US, the net interest margin has been in a long - term downward trend. The net interest margin cycle in the US is about 6 - 9 years, and in China, it is about 5 - 7 years. In the past 20 years, China's net interest margin has rebounded in 2004 - 2008, mid - 2009 to Q3 2012, and Q1 2017 to 2019 [20][24] 3.2.2 Long - term Influencing Factors - The bank's net interest margin is related to technology, labor combination, and the whole - society organizational efficiency. China has an advantage in KTI manufacturing, while the US leads in KTI services. To improve the social investment return rate, it is necessary to increase the proportion of the KTI industry and the share of service - sector KTI [25][31] 3.2.3 Relationship with Fundamentals - Empirically, the correlation between the net interest margin and economic fundamentals is not significant. Economic expansion does not necessarily lead to an increase in the net interest margin. In the economic crisis, macro - policies can drive the net interest margin to bottom out and rebound [32][37] 3.2.4 Relationship with Policy Rates - In the US, before 2015, the net interest margin was often opposite to the policy rate; after 2015, they were in the same direction. In China, the net interest margin and the policy rate generally move in the same direction, but due to policy intensity and structural factors, the net interest margin has been difficult to rebound since 2020 [40][43][47] 3.2.5 Relationship with Prices - In the US, the net interest margin is inversely related to CPI and leads CPI by 2 - 4 quarters. In China, the net interest margin is positively related to PPI and has a certain leading effect. Since 2020, the decoupling of the net interest margin and PPI is due to supply - side impacts, uneven profit improvement among different sectors, and structural factors affecting the transmission of bank liability prices [48][50][55] 3.2.6 Impact of Land Finance and Export - Manufacturing Chains - In China, real - estate investment and export - manufacturing investment are positively correlated with the net interest margin. Real - estate investment and export - manufacturing investment can lead the net interest margin, but since 2020, due to real - estate de - leveraging, the net interest margin has continued to decline [65] 3.2.7 Relationship with M1 - M1 is an early leading indicator of the economy and may have a leading effect on the bank's net interest margin. However, the rebound of M1 from 2022 - 2023 did not achieve this effect. The absolute level of M1 year - on - year growth is more important, and whether M1 can exceed nominal GDP is a key indicator [69] 3.3 How to Achieve "Neutral" Interest Rate Cuts? - Since 2020, the policy rate has been transmitted efficiently to the bank's asset side but poorly to the liability side, mainly due to the rigidity of deposit prices. The reasons for deposit price rigidity include the trend of time - deposit conversion, price - transmission blockages, and the more rigid deposit costs of large - scale banks [80][81][90] - To achieve "neutral" interest rate cuts, it is necessary to reduce the proportion of time deposits, crack down on high - interest deposit - soliciting, formulate a scientific loan - scale assessment mechanism, and maintain a necessary interest - rate cut rhythm [91][92]

Core Viewpoint - The banking sector has shown strong performance in the stock market, with significant gains over the past three years, leading to increased market capitalization and investor interest despite rising valuation concerns [1][3][7]. Group 1: Market Performance - The banking sector index rose by 18.38% this year, outperforming the overall market by 14 percentage points [1]. - Over the past year, the banking sector's total market capitalization increased by approximately 4.5 trillion yuan, with A-shares contributing over 3 trillion yuan [1]. - As of July 9, 2023, 34 out of 42 banking stocks closed higher, with notable gains from Xiamen Bank and Chongqing Rural Commercial Bank [2]. Group 2: Stock Gains and Valuation - The banking sector has been a "dark horse," with a two-year gain exceeding 50% and a three-year gain around 38% [3][4]. - Ten banking stocks have doubled in price over the past three years, with Agricultural Bank of China leading with a 153% increase [4]. - The median price-to-book (PB) ratio for banking stocks remains below 0.7, indicating potential undervaluation despite some banks breaking the net asset value [7]. Group 3: Dividend and Investment Appeal - The banking sector is projected to distribute approximately 373.7 billion yuan in dividends for the 2024 fiscal year, with many banks already announcing their dividend plans [8]. - The high dividend yield remains attractive to long-term investors, especially in a low-interest-rate environment [7][8]. - Analysts suggest that the current banking stock rally reflects a reassessment of the sector's fundamental stability, supported by regulatory policies and stable asset quality [8][9]. Group 4: Economic Outlook and Risks - The macroeconomic policy is expected to be gradually implemented, with a focus on fiscal measures over monetary policy [9]. - Concerns about rising non-performing loans and net interest margin pressures have been raised, but analysts argue that these risks are manageable [9][10]. - The banking sector is transitioning to a "weak cycle" model, indicating a shift in operational strategies and risk management [8].

Core Viewpoint - Recent adjustments in bank stock prices are influenced by various factors, including seasonal portfolio adjustments by large funds, rather than fundamental changes in the banking sector [4][6][40]. Group 1: Market Dynamics - Several banks have recently reached historical highs in stock prices, attracting significant market attention due to their "high dividend" and "low valuation" characteristics [2]. - The fluctuations in bank stock prices during the quarter-end are often temporary and related to fund reallocation rather than long-term trends [4][6]. Group 2: Bank Valuation Metrics - Banks exhibit high Return on Equity (ROE) but low Price-to-Book (PB) ratios due to their high leverage and concerns about asset quality [6][9]. - The long-term PB of a bank is influenced by its stable ROE and risk-return profile, with market perceptions often affecting valuation [6][9]. Group 3: Key Performance Indicators - The primary indicators for assessing a bank's value include its ability to generate future cash flows, stable ROE, and willingness to return value to shareholders [7][8]. - The stability of ROE can be evaluated through asset quality and the bank's risk management capabilities [10][11]. Group 4: Risk Management and Profitability - High interest margins can be achieved through effective risk management and maintaining a low cost of liabilities [12][28]. - The ability to manage customer relationships and maintain a stable deposit base is crucial for banks to sustain profitability [18][20]. Group 5: Industry Trends and Future Outlook - The banking sector is currently experiencing pressure due to declining net interest margins and rising non-performing loans, which may impact future profitability [32][34][40]. - Regulatory measures are being implemented to alleviate pressure on banks, ensuring they maintain their credit creation capabilities [40].

Investment Rating - The report maintains a "Buy" rating for Suzhou Bank [7]. Core Views - The state-owned major shareholder has been continuously increasing its stake, indicating a strong long-term value outlook. The bank's fundamentals remain robust, with government-related business driving accelerated credit growth. The improvement in deposit costs alleviates net interest margin pressure, and the asset quality indicators are consistently excellent. The dividend payout ratio for 2024 is expected to increase by 1.4 percentage points to 32.5% of net profit attributable to the parent company, supporting a year-on-year increase in DPS. The completion of the convertible bond conversion in Q1 this year has bolstered capital, supporting credit issuance and ensuring stable future dividends. Currently, the 2025 PB valuation is 0.83x, PE valuation is 8.2x, and the expected dividend yield is 4.1% [5][9][10]. Summary by Sections Shareholder Actions - On June 30, it was announced that the major shareholder, Suzhou Guofa Group, increased its stake in Suzhou Bank, along with its concerted action partner, Dongwu Securities, to a total of 15.00%. The actual controller of Suzhou Bank has changed to the Suzhou Municipal Finance Bureau. The group plans to increase its holdings by no less than 400 million yuan over the next six months, with a commitment not to reduce its holdings within six months after the completion of this plan [5][10]. Business Performance - Suzhou Bank has shown steady growth in its core business, with total loans increasing by 8.9% year-on-year as of the end of Q1. The bank's asset scale is currently 727.2 billion yuan, with a clear path towards reaching a trillion yuan in assets. The bank's net interest margin has been under pressure due to declining loan rates, but the reduction in deposit costs is expected to stabilize this margin moving forward. The bank maintains a conservative risk appetite, with a low non-performing loan ratio and strong provisioning capabilities [9][10][11]. Financial Projections - The bank's total assets are projected to grow from 693.71 billion yuan in 2024 to 1,009.84 billion yuan by 2027. The net profit attributable to the parent company is expected to increase from 5.07 billion yuan in 2024 to 6.04 billion yuan in 2027. The bank's return on equity (ROE) is projected to be around 10.19% by 2027, with a non-performing loan ratio stabilizing at approximately 0.82% [24].

Group 1 - Major commercial banks, including ICBC, CCB, and CMB, have recently suspended 5-year large-denomination certificates of deposit (CDs), with a reduced issuance of 3-year CDs as well [1] - The suspension of 5-year CDs is a strategy to lower funding costs as banks face low net interest margins and need to stabilize them by reducing liabilities [1] - The overall trend in the financial market shows a simultaneous decline in both deposit and loan interest rates, which is necessary for stabilizing banks' net interest margins and better serving the real economy [1] Group 2 - In May, a significant adjustment in deposit interest rates occurred, with major state-owned banks leading the way, resulting in medium- and long-term deposit rates entering the "1%" era [2] - The withdrawal of 5-year large-denomination CDs indicates a diminishing opportunity for investors to rely on medium- to long-term savings for wealth preservation and growth, highlighting the need for diversified investment strategies [2] - Investors are advised to compare different financial products, focus on interest rate trends, and choose products with better overall returns, while also being aware of the terms and conditions of these products [2] Group 3 - Investors are encouraged to allocate a portion of their portfolios to high-rated bonds and bond funds to complement savings with stable returns [3] - For those with higher risk tolerance, investing in equity assets through index funds can provide long-term capital appreciation potential [3] - Establishing a dynamic rebalancing mechanism is recommended to adjust asset allocations based on economic conditions and market valuations, achieving an effective balance between risk and return [3]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The report emphasizes a cautious optimism regarding the economic outlook, highlighting a stable recovery in social confidence and the need to strengthen domestic circulation [4][5] - It suggests that the banking sector will maintain stable operating performance in 2025, driven by optimized asset-liability structures, narrowing interest margin declines, controllable retail risks, and contributions from bond turnover [7] Summary by Relevant Sections Monetary Policy Insights - The People's Bank of China (PBOC) has shifted to a flexible approach in monetary policy implementation, focusing on the pace and intensity of policy tools without explicitly mentioning rate cuts [4][9] - The report indicates that the central bank will continue to guide financial institutions to increase credit supply while avoiding "funds idling" [5][9] Banking Sector Performance - The banking sector's total asset growth rate fell to 4.9% as of May 2025, with large banks recovering high growth rates while rural commercial banks stabilized [10] - The net interest margin for the banking industry is expected to show an "L" shaped trend, stabilizing around 1.4% for the year, contingent on the stability of the deposit structure and cost improvements [6][7] Investment Recommendations - The report recommends focusing on banks with stable dividend attributes and recovery expectations, suggesting that the sector will benefit from a low-interest environment [7] - Beneficiary stocks include Agricultural Bank of China, China Merchants Bank, CITIC Bank, and Beijing Bank, with cyclical stocks like Suzhou Bank also recommended [7]

Core Viewpoint - The article emphasizes that the banking industry has a strong business model despite common misconceptions, and it suggests that the current low valuations present significant investment opportunities [3][4][10]. Group 1: Misunderstandings about the Banking Industry - Misunderstanding 1: Banks are not a good business model. In reality, banks have historically been strong business models, with high profitability despite low valuations [3][4]. - Misunderstanding 2: Banks are overly affected by economic conditions. The article argues that banks manage bad debts over long cycles, and their performance is not as fragile as perceived [4][5]. - Misunderstanding 3: Declining interest rates and narrowing net interest margins (NIM) will hinder profit growth. The article states that while NIM is low, it is unlikely to decrease significantly further, and banks can still achieve profit growth [7][8]. Group 2: Current State of the Banking Sector - The current non-performing loan (NPL) ratio in China's banking sector is 1.8%, with a provision coverage ratio of 190%, indicating that the bad debt cycle is nearing its end [5][6]. - The article highlights that the banking sector has been managing bad debts effectively over the past decade, which has allowed for stable profit growth [5][6]. - The banking sector's NIM was reported at 2.06% in Q2, which is near historical lows, but the article suggests that this level is sustainable [7][8]. Group 3: Future Profitability and Valuation Potential - The article predicts that as bad debts are resolved and NIM stabilizes, banks will see a gradual increase in return on equity (ROE) and profit growth, potentially reaching 15%-20% ROE [10][11]. - It is suggested that the average price-to-book (PB) ratio for major banks could increase significantly, indicating substantial upside potential in valuations [12][13]. - The article argues that the banking sector is cyclical, and as the cycle turns positive, banks could experience significant valuation recovery, similar to past cycles [10][13]. Group 4: Investment Opportunities - The article posits that the current low interest in banks among institutional investors presents a unique opportunity for individual investors to capitalize on undervalued stocks [19][20]. - It emphasizes that while some banks like China Merchants Bank and Ping An are recognized as strong performers, there are opportunities across the entire banking sector, as many banks have yet to experience valuation recovery [22][24]. - The potential for significant price appreciation exists, as historical patterns show that banks can rapidly increase in value during recovery phases [17][18].

Core Viewpoint - The report from Rong360 Digital Technology Research Institute indicates a significant decline in bank deposit rates, with medium to long-term rates entering the "1 era," reflecting a broader trend of interest rate cuts aimed at stimulating economic growth and reducing corporate financing costs [1][4]. Group 1: Deposit Rate Trends - In May, the average interest rates for various term deposits showed a downward trend, with the 3-month average rate at 1.004%, 6-month at 1.212%, and 1-year, 2-year, 3-year, and 5-year rates at 1.339%, 1.428%, 1.711%, and 1.573% respectively [3]. - Compared to the previous month, the 3-month rate decreased by 24.3 basis points, while the 5-year rate was notably lower than the 3-year rate by 0.14 percentage points [3]. - This marks the first large-scale interest rate adjustment since 2025, with state-owned banks leading the way in reducing deposit rates, resulting in most 1-year fixed deposit rates falling below 1% [3]. Group 2: Monetary Policy and Economic Context - Analysts suggest that the central bank will continue to implement a moderately loose monetary policy to lower corporate financing costs and stimulate market activity, which may lead to further declines in deposit rates [4]. - The ongoing decline in deposit rates is seen as a strategy to maintain reasonable net interest margins for banks while ensuring the stability of the banking system [4]. Group 3: Impact on Banking Operations - The decline in deposit rates has led to a noticeable drop in the sales volume of fixed deposits, prompting banks to adopt aggressive strategies to attract deposits, including promotional activities [6][7]. - Regulatory bodies have issued warnings against chaotic deposit-raising practices, emphasizing the need for banks to focus on stable growth rather than merely increasing market share [8]. - Analysts highlight that the pressure from various financial products is driving banks to innovate in their customer engagement strategies, aiming to create a comprehensive financial service ecosystem [8].

Core Viewpoint - Yibin Bank has experienced a leadership change shortly after its IPO, with the new president, Jiang Lin, having limited banking experience compared to her predecessor, Yang Xingwang, who resigned due to personal health reasons. The bank's financial performance for 2024 has shown stagnation, with significant declines in key revenue metrics [1][2][12]. Group 1: Leadership Changes - Jiang Lin has been appointed as the new president of Yibin Bank, previously serving in senior roles at Wuliangye Group, and her appointment is pending approval from the national financial regulatory authority [2][3]. - Jiang Lin resigned from her position as a non-executive director of Yibin Bank while being recommended for the executive director role [2]. - Yang Xingwang, the former president, had over 30 years of banking experience and resigned without the bank expressing customary gratitude for his service [1][9]. Group 2: Financial Performance - Yibin Bank's 2024 financial results indicate a stagnation in growth, with operating income and net profit increasing by only 0.5% and 0.1% year-on-year, respectively [12]. - The bank's net interest income, which constitutes over 70% of its operating revenue, decreased by 11.64% in 2024, leading to a decline in net interest margin from 2.18% in 2023 to 1.71% in 2024 [12][13]. - The bank's non-performing loan (NPL) ratio at the end of 2024 was 1.68%, a slight decrease of 0.08 percentage points year-on-year, with the wholesale and retail sector showing an increase in NPL ratio to 1.99% [13][14].