Core Insights - The article emphasizes the critical role of banks in the bond market, highlighting that their asset allocation behavior significantly influences bond pricing and market trends, especially in the context of China's financial landscape [1][2] Group 1: Bank Asset Allocation and Bond Market Dynamics - Banks are the largest holders of bonds in China, with a projected holding scale of 91.23 trillion yuan by mid-2025, accounting for over 54% of the market [1] - The study aims to analyze the dynamic transmission mechanism of bank asset allocation on the bond market, moving beyond static perspectives to understand how allocation behavior evolves with economic cycles and regulatory constraints [2][4] Group 2: Static Relationship Between Bank Balance Sheets and Bond Markets - The asset allocation logic of banks is embedded within their balance sheet framework, where the liability side influences funding costs and stability, while the asset side reflects the trade-off between credit issuance and financial investments [3] - An increase in deposit growth and a decrease in funding costs lead banks to favor long-term government and local bonds, while weak deposit growth or rising interest rates push banks towards higher volatility, short-term trading assets [3] Group 3: Credit Issuance and Its Impact on Bond Markets - Empirical analysis from 2016 to 2025 indicates that household short-term loans have a leading effect on bond markets, with a notable increase in ten-year government bond yields observed within four months following an increase in loan growth [5][6] - In contrast, corporate loans exhibit less impact on bond yields, with their influence being more short-lived compared to household loans [6] Group 4: Heterogeneity in Bond Investment Behavior - The study categorizes bond investments into three types based on accounting methods and finds that different types of banks exhibit varying impacts on government bond yields [7] - State-owned banks tend to stabilize the market through their bond investments, while smaller banks may increase market volatility due to their trading strategies and yield preferences [7] Group 5: Conclusions and Policy Implications - The research reveals that credit issuance is pro-cyclical while bond investment is counter-cyclical, indicating a macro-regulatory function of bank asset allocation [8] - Recommendations include optimizing bond asset allocation, enhancing internal fund transfer pricing mechanisms, and strengthening risk management frameworks, particularly for smaller banks [8][9]

Core Viewpoint - Recent announcements from various local small and private banks indicate a new round of deposit rate cuts, primarily affecting fixed-term deposit rates, as banks adapt to changing market conditions and customer expectations [1][2]. Group 1: Deposit Rate Cuts - Numerous small and private banks across regions such as Henan, Yunnan, Guangdong, and Hainan have recently lowered their deposit rates, with some banks reducing rates by as much as 80 basis points [2]. - For instance, Pingyang Pudong Village Bank has reduced its three-year and five-year fixed deposit rates from 2.1% and 2.15% to 1.3% and 1.35%, respectively [2]. - Shanghai Huari Bank has initiated its seventh round of rate cuts this year, reducing its three-year fixed deposit rate by 15 basis points to 2.15% [2]. Group 2: Changes in Deposit Products - Some banks, such as Guizhou Wuchuan Rural Commercial Bank, have stopped the automatic renewal feature for high-interest deposit products like notice deposits and zero-balance savings [3]. - This shift indicates a broader trend of banks adjusting their product offerings in response to declining deposit rates [3]. Group 3: Future Outlook - Experts predict that there is still room for further interest rate cuts, as the downward trend in deposit rates continues [4]. - The People's Bank of China (PBOC) has maintained the Loan Prime Rate (LPR) steady for five consecutive months, with the one-year LPR at 3% and the five-year LPR at 3.5% [4]. - Analysts expect potential new rounds of interest rate cuts and reserve requirement ratio reductions from the central bank, which could lead to lower loan rates for businesses and consumers [4]. Group 4: Challenges for Commercial Banks - The decline in deposit rates and the rise of investment awareness among residents have led to a phenomenon termed "deposit migration," posing challenges for commercial banks [5]. - Experts suggest that banks should shift their focus from merely attracting deposits to enhancing customer service and product offerings to retain client funds and generate management fees [5].

1. Report Industry Investment Rating No information provided on the industry investment rating in the given content. 2. Core Viewpoints of the Report - The report focuses on the supply, demand, and pricing of inter - bank certificates of deposit (CDs), analyzes the core factors affecting their supply and demand, and discusses the supply pressure of CDs within the year. It points out that since 2025, there have been some "unusual" phenomena in CDs, and the market's concerns about CDs have resurfaced, mainly due to the potential supply pressure from the maturity of high - interest fixed - term deposits in the fourth quarter and the possible weakening of demand - side stability [11]. - Considering the central bank's current intention to support the market, the ongoing repair of real - economy credit demand, and the stable supply rhythm of government bonds, the pressure for CDs to be issued at higher prices in the fourth quarter may be relatively controllable, but there may be some stage fluctuations. The main fluctuation range of 1 - year CDs is expected to remain between 1.6% - 1.7% [5]. 3. Summary by Relevant Catalogs 3.1 Development History: The Appeal and Boundary of Active Liabilities - **2013 - 2017: Rapid Expansion after Formal Start** - In December 2013, the issuance of the "Interim Measures for the Administration of Inter - bank Certificates of Deposit" marked the formal start of the development of inter - bank CDs. From 2014 to 2017, the issuance scale increased from nearly 1 trillion yuan in 2014 to nearly 20 trillion yuan in 2017, mainly issued by small and medium - sized banks such as city commercial banks and joint - stock banks [12]. - The rapid expansion was driven by the inherent advantages of CDs as an active liability tool, the "disintermediation of deposits", the trend of interest rate liberalization, and the change in the central bank's base - money injection method [14][21]. - **2017 - 2023: Stable Development under Regulatory Constraints** - Since 2017, a series of regulatory measures have been introduced to guide the financial system to return to its origin, improve the quality and efficiency of serving the real economy, and strengthen risk prevention and control. The issuance growth of inter - bank CDs has flattened out [23]. - In terms of structure, inter - bank CDs have become the fourth - largest variety in the inter - bank market. The issuance scale of large state - owned banks has increased slightly year by year, and the proportion of 1 - year - term varieties has increased significantly since 2018 [27][28]. - **Since 2023: The Issuance Scale Rises Again** - In 2023, the annual issuance scale exceeded 25 trillion yuan, with state - owned banks accounting for 26%. In 2024, the scale exceeded 30 trillion yuan, and the proportion of state - owned banks reached 28%. This was mainly affected by the downward trend of CD issuance costs, the expansion of the deposit - loan gap, and the concentrated issuance of government bonds [32]. 3.2 Supply Willingness and Rhythm - **Liquidity Gap Management on the Liability Side** - During periods of high capital demand, such as large - scale bank credit issuance and concentrated government bond supply, the net financing scale of CDs usually increases, showing certain seasonal patterns and being affected by policies [47]. - Weak deposit growth on the liability side requires CDs to supplement liabilities, which is more of a trend change and closely related to regulatory norms [50]. - To cope with foreseeable liquidity consumption within the month and avoid large fluctuations in funds to lock in lower issuance costs, CD supply shows certain regularities within the month, usually concentrating in the first three weeks [50]. - **Cost Considerations on the Liability Side** - The demand for CD issuance is affected by the central bank's medium - and long - term liquidity injection. If banks can obtain lower - cost funds from the central bank, their willingness to issue CDs will decrease [54]. - Banks will adjust the maturity structure of CD issuance based on cost considerations. In a loose liquidity environment, they tend to lengthen the maturity of CD issuance to lock in lower financing costs [56]. - From the perspective of asset returns, if the demand for real - economy loans is expected to be strong and the asset - liability spread is expected to widen, banks tend to increase the issuance scale of CDs to reserve liability sources in advance [62]. - **Constraints of Regulatory Indicators** - Issuing inter - bank CDs helps improve liquidity regulatory indicators, especially the liquidity coverage ratio (LCR), net stable funding ratio (NSFR), and liquidity matching ratio (LMR) [65]. - Different maturities of CDs have different conversion coefficients in regulatory indicators. Long - term CDs usually have a positive impact on improving these indicators, while short - term CDs may not [66]. - **Issuance Characteristics under the Management of Filing Quotas** - The issuance of inter - bank CDs adopts a filing system, and the filing quota is managed on a balance basis. The balance of inter - bank CDs at any time within the year shall not exceed the annual filing quota [72]. - There is a negative correlation between the utilization progress of CD filing quotas and the deposit ratio. Banks with strong deposit - attracting ability and high deposit ratios have lower demands for issuing CDs [73]. 3.3 Demand Side: Who Are the Main Allocation Forces? - **Commercial Banks** - Commercial banks' allocation of CDs is a process of seeking a dynamic balance between risk and return under the constraints of regulatory frameworks and market environments. Different banks have different allocation logics due to differences in liability costs, credit issuance, and regulatory indicators [84][86]. - Rural commercial banks and large banks are the main buyers of CDs. Rural commercial banks' allocation logic has changed since 2023, from a "seesaw" relationship with credit issuance to focusing more on the allocation value of CDs in an "asset shortage" situation [88][89]. - Large banks' weak credit issuance demand in recent years has increased their demand for allocating CDs, and they show a characteristic of increasing net purchases at the end of the month [98]. - **Bank Wealth Management** - Bank wealth management shows a distinct right - hand trading characteristic in investing in CDs and is also affected by factors such as liability - side stability, regulatory requirements, and monetary policy. In recent years, the expansion of the liability side has increased its demand for CD allocation [102]. - Current - management wealth management products are the main force in CD allocation, preferring short - term CDs due to regulatory restrictions on the average remaining maturity of product investment portfolios [102]. - **Money Market Funds** - Compared with the right - hand trading of wealth management products, the peak of net purchases by money market funds usually coincides with the inflection point of CD interest rates, which may drive the inflection point of CD prices to some extent [4]. 3.4 How Are CDs Priced? - **Theoretical Pricing Benchmark of CDs** - Policy interest rates (MLF/OMO + 30BP) form the theoretical upper limit of CD pricing, while SHIBOR, DR interest rates, deposit interest rates, and R001 form the theoretical lower limit. This pricing system anchors CD interest rates by affecting supply and demand [5]. - **Core Factors Affecting CD Supply and Demand** - In the short term, CD interest rates are affected by supply and demand forces, including the liability - side capital gap, liability costs, asset returns, regulatory regulations and assessments, and the institutional behavior of allocation forces [5]. - **Outlook on the Supply Pressure of CDs within the Year** - Considering the central bank's support intention, the ongoing repair of real - economy credit demand, and the stable supply rhythm of government bonds, the pressure for CDs to be issued at higher prices in the fourth quarter may be relatively controllable, but there may be some stage fluctuations. The main fluctuation range of 1 - year CDs is expected to remain between 1.6% - 1.7% [5].

Core Insights - The recent increase in household deposits and non-bank financial institution deposits indicates a shift in asset allocation behavior among residents, reflecting a response to changes in asset return rates [1][2] Group 1: Deposit Trends - In the first three quarters of this year, RMB deposits increased by 22.71 trillion yuan, with household deposits rising by 12.73 trillion yuan and non-bank financial institution deposits increasing by 4.81 trillion yuan [1] - The growth rate of household deposits has slowed compared to previous highs, while non-bank deposits continue to grow rapidly [1][2] Group 2: Historical Context - The phenomenon of "deposit migration" is not new and has been a regular occurrence in the development of financial markets over the past 20 years, with various asset types attracting funds at different times [2] - The rapid growth of non-bank financial institution deposits is linked to the increased regularization of non-bank deposits and the holding of interbank certificates of deposit [2] Group 3: Impact of Interest Rates - Changes in interest rates act as a guiding mechanism for fund flows, with "deposit migration" resulting from relative changes in yields across different financial markets [2] - As expectations for bond and stock yields rise, individuals tend to increase their holdings in these assets, leading to a corresponding reduction in other asset allocations [2] Group 4: Economic Implications - Active asset reallocation based on yield comparisons can optimize resource allocation and support high-quality economic development [3] - The movement of funds into capital markets through various channels can provide direct financing support to the real economy, reflecting an increase in wealth management awareness among investors [3] Group 5: Challenges and Recommendations - Despite the benefits of diversified asset allocation, challenges such as information asymmetry, uneven investor education levels, and the need for improved market systems still exist [3] - Continuous investor education, diversification of financial product offerings, and enhanced market regulation are essential to maintain fair and transparent markets and protect investor rights [3]

Core Viewpoint - The article discusses the evolution and valuation of floating rate bonds (FRBs) in China, highlighting their unique characteristics and the need for improved valuation methods in the context of interest rate marketization and green finance development [1][2]. Group 1: Market Evolution of Floating Rate Bonds - The development of FRBs reflects the phased characteristics of China's financial system reform, experiencing three expansion phases from 1995 to 2021, with a current outstanding amount exceeding 5 trillion yuan [3]. - The liquidity of the FRB market is notably low, with monthly transaction volumes around 50 billion yuan, accounting for less than 0.2% of the total market [3]. Group 2: Research Objectives and Methodology - The study focuses on the valuation and risk measurement of FRBs, using the Industrial and Commercial Bank of China's 2025 first green financial bond as a representative case [4]. - A dynamic valuation model is established using forward rate predictions, integrating risk measurement through the DV01 metric to assess interest rate sensitivity [4]. Group 3: Key Findings on Valuation and Risk Measurement - Dynamic valuation methods outperform static approaches, with the theoretical price of the selected green bond aligning closely with market performance, while static methods may incur valuation errors exceeding 0.5% [6]. - FRBs exhibit defensive characteristics during rising interest rate cycles, with a price decline of only 0.16% when rates rise by 100 basis points, compared to a 2.3% decline for fixed-rate bonds [6]. - In declining interest rate environments, FRBs show limited upside potential, with price increases of only 0.16% when rates drop by 100 basis points, significantly lower than the 2.3% increase for fixed-rate bonds [6]. - The DV01 measurement indicates a low sensitivity of FRBs to interest rate changes, providing a risk hedging tool for institutional investors [6]. Group 4: Comparison with Fixed Rate Bonds and Policy Implications - The study reveals the complementary nature of FRBs and fixed-rate bonds in asset allocation, suggesting that FRBs are suitable as defensive assets in rising rate environments, while fixed-rate bonds are preferable in declining rate scenarios [7]. - The research contributes to theoretical and policy discussions by proposing a dynamic valuation framework, localizing risk measurement applications, and offering practical insights for asset allocation strategies [7]. Group 5: Market Development and Future Outlook - Despite the advantages of FRBs, the market faces challenges such as weak liquidity, an underdeveloped forward rate derivatives market, and insufficient investor awareness [8]. - Future efforts should focus on enhancing market liquidity, improving valuation systems, and strengthening investor education to promote the adoption of FRBs [8]. - Overall, FRBs are positioned to become significant tools for institutional investors in asset allocation and risk management as China's financial market continues to evolve [8].

Group 1 - The core argument emphasizes the need for the central bank to enhance its monetary policy independence by increasing the issuance of short-term government bonds to improve the monetary control mechanism [1][11][15] - The central bank's monetary policy has historically been constrained by exchange rate policies, which limited its ability to manage domestic liquidity effectively [2][6][10] - The transition from relying on foreign exchange reserves to domestic credit channels for monetary policy implementation marks a significant shift in China's monetary control strategy [10][12] Group 2 - The People's Bank of China (PBOC) has gradually shifted its focus from foreign exchange interventions to domestic liquidity management, particularly through the use of medium-term lending facilities and other monetary policy tools [8][12][13] - The lack of short-term government bonds has been identified as a critical issue for the PBOC's open market operations, which traditionally rely on such instruments for liquidity management [14][15] - Recent policy changes, including the resumption of government bond trading in the open market, indicate a move towards a more flexible and responsive monetary policy framework [12][13][15]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The spread of bond varieties is expected to narrow periodically. The 5 - year and 10 - year China Development Bank - Treasury bond spread may have convergence opportunities as the bond market sentiment stabilizes and institutional liability - side pressure eases [1][7]. - In the short term, be vigilant against the periodic impact caused by institutions cashing in floating profits at the end of the quarter [7]. - Next week, the supply pressure of Treasury bonds will decrease, but the central bank's reverse repurchase maturity amount is large, and the central bank may restart the 14 - day reverse repurchase to cope with the tight liquidity at the end of the quarter, and the capital interest rate center may rise [6]. 3. Summary by Relevant Catalogs 3.1 Bond Market Weekly Review - From September 15th to 19th, the bond market fluctuated under the influence of multiple factors such as weak fundamental data, tight liquidity, supply pressure, and policy expectations. The yield of the 10 - year Treasury active bond ranged from 1.76% to 1.81% [12]. - Treasury bond yields generally first declined and then rose. As of September 19th, the 1 - year Treasury bond yield closed at 1.3900%, down 1.00bp from the previous Friday; the 10 - year Treasury bond yield closed at 1.8789%, up 1.19bp; the 30 - year Treasury bond yield closed at 2.1996%, up 1.56bp [15]. - Most of the key term spreads of Treasury bonds widened. The 10Y - 1Y spread of Treasury bonds widened by 2.19bp to 48.89bp, and the 30Y - 10Y spread widened by 0.37bp to 32.07bp [21]. 3.2 Bond Market Data Tracking 3.2.1 Funding Situation - From September 15th to 19th, the central bank's open - market operations had a net investment of 5,923.00 billion yuan. The central bank conducted 18,268.00 billion yuan of open - market reverse repurchases, with 12,645.00 billion yuan maturing; and 1,500.00 billion yuan of treasury cash fixed - deposit tenders, with 1,200.00 billion yuan maturing. Next week, the reverse repurchase maturity amount is 18,268.00 billion yuan, larger than the previous week [24]. - Funding interest rates generally rose. DR001 rose 9.98bp to 1.4644% from the previous week, R007 rose 7.4bp to 1.5613%, and DR007 rose 7.53bp to 1.5566%. The SHIBOR interest rate also rose [25][37]. 3.2.2 Supply Side - From September 15th to 19th, the total issuance volume of interest - rate bonds decreased compared with the previous week, and the net financing amount increased. The total issuance scale of interest - rate bonds was 15,004.49 billion yuan, a decrease of 1,517.54 billion yuan from the previous week; the total repayment scale was 10,481.64 billion yuan, a decrease of 4,636.79 billion yuan; the net financing scale was 4,522.85 billion yuan, an increase of 3,119.26 billion yuan [39]. - The issuance scale of government bonds decreased month - on - month, and the net financing amount decreased month - on - month. Treasury bonds were issued at 3,275.20 billion yuan, a decrease of 2,388.50 billion yuan month - on - month; local government bonds were issued at 1,885.19 billion yuan, a decrease of 1,131.54 billion yuan [42]. - The issuance scale of inter - bank certificates of deposit increased, the net financing amount increased month - on - month, and the issuance interest rate rose. The total issuance volume of inter - bank certificates of deposit was 9,844.10 billion yuan, an increase of 2,002.50 billion yuan from the previous week; the total repayment volume was 8,500.50 billion yuan, a decrease of 4,021.20 billion yuan; the net financing amount was 1,343.60 billion yuan, an increase of 6,023.70 billion yuan [48]. 3.3 Next Week's Outlook and Strategy 3.3.1 Central Bank's Adjustment of 14 - day Reverse Repurchase Operation Mechanism - Since September 19, 2025, the central bank has adjusted the open - market 14 - day reverse repurchase operation to the "fixed quantity, interest - rate tender, multiple - price winning bid" method. The operation time and scale will be flexibly determined according to liquidity management needs [4]. - The adjustment has three main changes: fixed - quantity tendering to enhance market expectation stability; interest - rate tendering to promote market - oriented price discovery and clarify the core position of the 7 - day interest rate as the policy interest rate; and the introduction of a multiple - price winning bid mechanism to improve capital allocation efficiency and help the central bank observe the real pricing of medium - term liquidity [4]. - The adjustment timing has dual considerations: to meet seasonal liquidity needs and to deepen interest - rate marketization reform [5]. 3.3.2 Next Week's Outlook - The supply pressure of Treasury bonds will decrease next week. The planned issuance of Treasury bonds is 2,170.00 billion yuan, and the planned issuance of local government bonds is 1,960.51 billion yuan [6]. - The central bank's reverse repurchase maturity amount is large next week, and the capital interest rate center may rise. The probability of the central bank restarting the 14 - day reverse repurchase to cope with the tight liquidity at the end of the quarter is relatively high [6]. 3.3.3 Bond Market Strategy - Recently, the bond market has been under pressure, mainly disturbed by three factors: the strengthening of M1 year - on - year, the warming of market risk appetite and the diversion of funds by the A - share market, and the "anti - involution" policy expectation pushing up commodity prices and strengthening inflation expectations [7]. - In the short term, be vigilant against the periodic impact caused by institutions cashing in floating profits at the end of the quarter. The 5 - year and 10 - year China Development Bank - Treasury bond spread may converge [7]. 3.4 Global Major Asset Classes - The U.S. Treasury yield curve steepened. As of September 19, 2025, the yields of 1Y, 2Y, 3Y, 5Y, 10Y, and 30Y U.S. Treasuries changed by - 6bp, + 1bp, + 4bp, + 5bp, + 8bp, and + 7bp respectively compared with September 12th, and the 10Y - 2Y term spread widened by 7bp to 57bp [72]. - The U.S. dollar index rose slightly, and the central parity rate of the U.S. dollar against the RMB was raised. Gold and silver prices rose, and crude oil trends were divided [72][74].

Investment Rating - The report maintains a "Recommended" rating for the banking sector [1][39]. Core Insights - The banking sector underperformed the market, with a decline of 4.21% compared to a 0.44% drop in the CSI 300 index. State-owned banks, joint-stock banks, city commercial banks, and rural commercial banks saw declines of 4.43%, 4.48%, 3.61%, and 3.54% respectively [3][13]. - The People's Bank of China (PBOC) adjusted the 14-day reverse repurchase operation to a fixed quantity and interest rate bidding, enhancing liquidity management and emphasizing the 7-day OMO rate as the core policy rate. This change is expected to benefit larger state-owned banks more than smaller banks [3][5][6]. - A new set of policies aimed at boosting consumption has been introduced, focusing on enhancing service consumption platforms, improving service quality, and increasing financial support for consumption-related sectors. This is expected to stimulate retail credit growth [11][12]. Summary by Sections Latest Research Insights - The PBOC's adjustment of the 14-day reverse repurchase operation aims to optimize liquidity management and reinforce the 7-day OMO policy rate [5][6]. Weekly Market Performance - The banking sector's performance was notably weaker than the broader market, with significant declines across various types of banks [3][13]. Valuation of the Sector and Listed Companies - As of September 19, 2025, the banking sector's price-to-book (PB) ratio stands at 0.67, indicating a 37.43% discount compared to the overall A-share market [29][35]. Investment Recommendations - The report suggests that the adjustments in reverse repurchase operations and the new consumption policies will lead to improved fundamentals for banks, with a potential turning point in mid-term performance. Specific banks recommended for investment include Industrial and Commercial Bank of China, Agricultural Bank of China, Postal Savings Bank of China, Jiangsu Bank, Hangzhou Bank, and China Merchants Bank [39][40].

Core Viewpoint - The People's Bank of China (PBOC) has maintained the Loan Prime Rate (LPR) at 3.0% for 1-year and 3.5% for 5-year and above, indicating stability in monetary policy and potential for future adjustments to stimulate domestic demand and stabilize the real estate market [1][6]. Group 1: LPR and Monetary Policy - The LPR for both 1-year and 5-year terms remained unchanged in September, aligning with market expectations due to stable policy rates [4]. - The PBOC's 7-day reverse repurchase rate has not changed, suggesting that the pricing basis for the LPR has not shifted significantly [1][4]. - Analysts believe there is still room for downward adjustments in policy rates and LPR before the end of the year to support economic growth and stabilize the real estate market [6][7]. Group 2: Economic Conditions and Future Outlook - Recent macroeconomic data has shown volatility due to various factors, including extreme weather and external market fluctuations, but fiscal policies have been supportive since the beginning of the year [4]. - The PBOC is expected to implement a new round of interest rate cuts and reserve requirement ratio reductions in the fourth quarter, which could lead to lower loan rates for businesses and consumers [7]. - The current low inflation levels provide sufficient space for a moderately loose monetary policy, reducing concerns about high inflation [7]. Group 3: Market Reactions and Implications - The shift to a fixed quantity and interest rate bidding for the 14-day reverse repurchase operations indicates a move towards market-driven interest rates [5]. - Analysts suggest that the recent Federal Reserve rate cut may improve the environment for China's monetary easing, allowing for more aggressive domestic policy adjustments [6][8]. - The need for further support in the real estate market is emphasized, with expectations for targeted reductions in the LPR for longer-term loans to stimulate housing demand [7].

Core Viewpoint - Xiamen Bank reported a decline in overall performance for the first half of the year, with a year-on-year decrease in operating income and net profit, primarily due to fluctuations in the bond market [1][4][5]. Financial Performance - For the first half of 2025, Xiamen Bank achieved operating income of 2.689 billion, a year-on-year decrease of 7.02% [2]. - The net profit attributable to shareholders was 1.158 billion, down 4.59% year-on-year [1][2]. - The bank's net interest margin was recorded at 1.08%, ranking last among 42 A-share listed banks, significantly below the industry average of 1.42% [5]. Revenue Structure - Interest income for the period was 1.992 billion, showing a slight decline of 0.47% year-on-year, while non-interest income fell sharply by 21.72% to 697 million [4][5]. - The fair value changes in bond investments resulted in a loss of 204 million, reflecting the impact of market volatility on the bank's investment business [4]. Strategic Initiatives - The new management under Chairman Hong Pipa is focusing on optimizing loan structures and reducing deposit costs to address the narrowing interest margin [5][6]. - The bank plans to enhance interest income through a strategy of "increasing volume while stabilizing price" and diversifying revenue sources [3][6]. Shareholder Returns - Xiamen Bank announced a mid-year dividend payout ratio of 32.62%, the highest since its listing, indicating a commitment to shareholder returns [3][7]. - The bank has consistently maintained a cash dividend rate above 30% for four consecutive years [7]. Market Context - The challenges faced by Xiamen Bank are reflective of broader industry trends, including narrowing net interest margins and pressure on profitability due to market conditions [7]. - Analysts suggest that regional banks like Xiamen Bank should leverage local advantages and invest in financial technology to enhance service efficiency and risk management [7].