Core Viewpoint - The first batch of listed banks' mid-year reports reflects positive operational data, with significant growth in both revenue and net profit for the first half of 2025, indicating a bullish trend in the banking sector [1][2]. Group 1: Performance of Listed Banks - Four listed banks, including Qilu Bank, Hangzhou Bank, Changshu Bank, and Ningbo Bank, reported growth in both operating income and net profit for the first half of 2025, with Qilu Bank, Hangzhou Bank, and Changshu Bank achieving over 10% year-on-year growth in net profit [1][3]. - Qilu Bank's operating income reached 6.782 billion yuan, a 5.76% increase year-on-year, with a net profit of 2.734 billion yuan, up 16.48% [3]. - Ningbo Bank reported operating income of 37.16 billion yuan, a 7.91% increase, and a net profit of 14.772 billion yuan, up 8.23% [3]. - Hangzhou Bank's operating income was 20.093 billion yuan, a 3.89% increase, with a net profit of 11.662 billion yuan, up 16.67% [3]. - Changshu Bank achieved operating income of 6.062 billion yuan, a 10.10% increase, and a net profit of 1.969 billion yuan, up 13.55% [3]. Group 2: Asset Quality and Loan Growth - All four banks maintained positive loan growth, with Ningbo Bank's loans increasing by 13.36% year-to-date, Qilu Bank's by 10.16%, Hangzhou Bank's by 7.67%, and Changshu Bank's by 4.40% [4]. - The asset quality of these banks showed stability or improvement, with Qilu Bank's non-performing loan (NPL) ratio decreasing to 1.09%, down 0.10 percentage points from the beginning of the year [4]. - The provision coverage ratios for these banks were significantly above the industry average, with Hangzhou Bank at 520.89%, Changshu Bank at 489.53%, Ningbo Bank at 374.16%, and Qilu Bank at 343.24% [4]. Group 3: Market Trends and Fund Allocation - The banking sector has seen a bullish trend since 2025, with 11 A-share listed banks having a cumulative increase of over 20% year-to-date as of July 25 [1][11]. - In the H-share market, 15 listed banks have seen increases of over 30%, with some like Qingdao Bank and Huishang Bank rising over 50% [11]. - Public funds have increased their allocation to bank stocks, with the proportion of active public funds in bank stocks reaching a new high since June 2021, indicating a shift towards quality regional banks and undervalued banks [12].

Investment Rating - The report maintains an "Increase" rating for the non-bank financial sector, indicating a positive outlook for the industry in the next 6 to 12 months [4]. Core Insights - As of the end of Q1 2025, the total holding of public funds in the non-bank financial sector is 0.83%, which is a decrease of 0.39 percentage points from the end of 2024. This represents a significant underweight compared to the industry market capitalization of the CSI 300, with a gap of 9.43 percentage points [4]. - The report highlights that the insurance sector, excluding China Ping An, has seen a reduction in holdings, with China Pacific Insurance and People’s Insurance experiencing the most significant decreases. The insurance sector's holding is at 0.58%, down 0.05 percentage points from the beginning of the year [4]. - The brokerage and internet finance sectors have also faced reductions, with the overall holding in these sectors at 0.21%, a decrease of 0.31 percentage points from the end of 2024 [4]. - The report notes that the non-bank financial sector is currently at a historical low in terms of holding and valuation, suggesting potential for recovery as market conditions improve. The average daily trading volume for stock funds reached 15,248 billion yuan in Q1 2025, a year-on-year increase of 70% [4]. Summary by Sections Public Fund Holdings in Non-Bank Financial Sector - The top five stocks in the non-bank financial sector by public fund holdings are China Ping An (4.548 billion yuan), China Pacific Insurance (2.308 billion yuan), Huatai Securities (1.512 billion yuan), Tonghuashun (1.246 billion yuan), and Jiangsu Jinzhong (0.976 billion yuan) [4]. Insurance Sector Analysis - The insurance sector's dynamic valuation is at 0.60x PEV, down 0.09 percentage points from the beginning of the year. The holdings of major insurance companies as of Q1 2025 are: China Life (0.02%), China Ping An (0.34%), China Pacific Insurance (0.17%), Xinhua Insurance (0.04%), and People’s Insurance (0.01%) [4][11]. Brokerage and Internet Finance Sector Analysis - The brokerage sector's valuation is at 1.4x P/B as of Q1 2025, down from 1.49x P/B at the end of 2024. Major stocks in this sector include Huatai Securities (0.051%), Tonghuashun (0.042%), and Dongfang Caifu (0.027%) [4][12]. Comparison with CSI 300 - The non-bank financial sector's public fund holding ratio is 0.83%, significantly lower than the CSI 300 industry allocation of 10.26%. The insurance sector's holding is 0.58% compared to 4.90% for the CSI 300, while the brokerage sector's holding is 0.21% against 5.14% for the CSI 300 [4][13].