Monthly Performance - The banking sector increased by 2.99% from November 1 to November 28, 2025, outperforming the CSI 300 index by 5.4 percentage points, ranking second among 31 Shenwan first-level industries [1][6] - Institutional investors increased their holdings in bank stocks due to a stable improvement in fundamentals, shareholder buybacks, and expectations of valuation recovery [1][6] Valuation Trends - State-owned banks saw a significant increase in valuation, with their PB ratio rising from approximately 0.76X at the beginning of the month to 0.78X by the end, while the PB ratios for joint-stock banks and city commercial banks remained stable at 0.67X and 0.60X, respectively [1][9] - As of November 28, the overall PE ratio for the banking sector was 6.53 times, with a historical percentile of 56.18%, and the PB ratio was 0.56 times, with a historical percentile of 32.25% [21] Individual Bank Performance - Notable gainers included Bank of China (8.20%), China Everbright Bank (8.08%), China Construction Bank (5.81%), and Nanjing Bank (5.13%), while Qingdao Bank and rural commercial banks experienced significant declines [1][12] - The performance of banks with improved earnings and mid-term dividend payouts led to notable increases in their stock prices [1][12] Market Environment - The 10-year government bond yield rose from around 1.80% in early November to 1.84% by the end of the month, while the 1-year bond yield remained stable at approximately 1.40% [16] - The trading volume in the banking sector increased by 13.07% year-on-year, accounting for 1.65% of the total trading volume in the AB share market, although it decreased by 0.18 percentage points compared to the previous month [19] Social Financing and Credit Trends - In October, the social financing growth rate fell to 8.5%, with new social financing of 816.1 billion yuan, a year-on-year decrease of 5.959 billion yuan [25] - The decline in credit supply was attributed to a shift in government bond issuance timing and a decrease in demand for consumer loans [25]

Investment Rating - The report maintains a "Buy" rating for the banking sector, highlighting that multiple factors are driving the rise in bank stocks, while real estate risks are deemed manageable [2]. Core Insights - The report emphasizes that the balance between supply and demand is crucial for economic recovery, with recent policies aimed at boosting consumer demand expected to enhance this balance [2]. - The M1 growth rate peaked and has started to decline, indicating a shift in deposit flows towards non-bank deposits due to a buoyant capital market [2]. - The exposure to real estate risks is decreasing, with a notable reduction in the balance of real estate development loans, suggesting that banks are adopting a more cautious approach [2][7]. - The report notes that the non-performing loan ratio for real estate has decreased, indicating improved risk management within the banking sector [7]. Monthly Market Performance - In November 2025, the banking sector saw a cumulative increase of 2.99%, outperforming the CSI 300 index by 5.4 percentage points, ranking second among 31 sectors [11]. - The report indicates that institutional investors have increased their holdings in bank stocks, driven by a stable fundamental outlook and expectations of valuation recovery [11]. - The valuation of state-owned banks has shown significant improvement, with the price-to-book (PB) ratio rising from approximately 0.76X at the beginning of the month to 0.78X by the end [13]. Banking Sector Fundamentals - The report tracks monthly data indicating that the banking sector's core revenue-generating capacity has strengthened, with asset quality remaining stable [8]. - The report highlights that the banking sector's current valuation is at a historically low level, with a price-to-earnings (PE) ratio of 6.53 and a PB ratio of 0.56 [11]. Investment Recommendations - The report suggests a diversified investment strategy focusing on banks with high dividend yields and strong asset quality, particularly smaller banks with solid provisioning coverage [7]. - It also recommends attention to low-valuation joint-stock banks with potential for return on equity (ROE) improvement, such as CITIC Bank and Industrial Bank [7]. - The report indicates that banks with robust customer bases and excellent risk control are likely to have greater valuation elasticity in the context of economic structural transformation [7].