Investment Rating - The investment rating for the banking sector is "Positive" and maintained [13] Core Insights - The banking sector experienced a slight pullback this week, with the Yangtze Bank Index declining by 0.5%, underperforming compared to the CSI 300 and ChiNext indices, primarily due to short-term market style changes. However, this volatility does not affect the long-term direction of dividend allocation in bank stocks, as institutional funds are accelerating their allocations ahead of the state-owned banks' mid-term dividend announcements [2][20] - Industrial and Commercial Bank of China (ICBC) has been upgraded to the third group of globally systemically important banks (G-SIBs), with capital requirements set to increase by 0.5 percentage points starting in 2027. Despite this, ICBC's core Tier 1 capital adequacy ratio stands at 13.57% as of the end of Q3, expected to remain above 13.5% by the end of 2027 under stable dividend payout conditions [6][42] Summary by Sections Market Performance - The banking sector index fell by 0.5% this week, underperforming the CSI 300 and ChiNext indices by 2.2% and 5.1%, respectively. The decline is attributed to short-term market style changes, but long-term dividend allocation remains positive as institutional funds increase their investments [2][9][20] - As of November 28, the average dividend yield for the six major banks' A-shares decreased to 3.74%, with a spread of 190 basis points over the 10-year government bond yield. The average dividend yield for H-shares is 4.90%, with a discount rate of 23% compared to A-shares [23][27] Regulatory Changes - ICBC's upgrade to the third group of G-SIBs will result in an increase in capital requirements to 9.5% by 2027. The bank's TLAC risk-weighted ratio is 21.52%, meeting the 2025 regulatory requirement of 20%, but will need to address a shortfall as the requirement increases to 22.5% in 2028 [6][42][45] Individual Bank Performance - Individual bank performance showed that Everbright Bank's H-shares had a notable increase, while shares of Bank of China and Postal Savings Bank of China experienced a pullback after previous gains. The recent increase in southbound capital holdings in H-shares indicates a positive trend [2][20] - The report highlights the potential for strong redemption opportunities in convertible bonds linked to bank stocks, as the prices of underlying stocks are approaching redemption thresholds [10][28]