Investment Rating - Industry Rating: Outperform the Market (maintained rating) [4] Core Viewpoints - The recent pullback in bank stocks is viewed as a phase adjustment rather than the end of the current bull market [2][9] - The long-term logic for systematic valuation recovery in bank stocks remains unchanged, supported by improving fundamentals and attractive valuations for long-term capital [3][13] Summary by Sections 1. Recent Pullback Influences - The bank index experienced a 7.2% decline in mid to late July due to intensified short-term selling pressure, influenced by trade tensions and concentrated dividend payouts [2][9] - In late August, the index fell an additional 3.7% as market sentiment shifted towards growth sectors, indicating a temporary adjustment rather than a trend reversal [10][11] 2. Long-term Valuation Recovery Logic - Fundamental improvements are noted, with a slowdown in net interest margin decline alleviating operational pressures on banks [3][14] - The net profit of commercial banks decreased by 1.2% year-on-year in the first half of 2025, showing a narrowing decline compared to the first quarter [13] - The attractiveness of bank stocks for medium to long-term capital remains strong, with a dividend yield of approximately 3.97% compared to lower yields from other financial assets [15][16] 3. Investment Recommendations - The recent adjustments do not alter the long-term valuation recovery logic for bank stocks, with reduced pressure on net interest margins supporting stable performance [18] - The bank sector is expected to attract more capital due to regulatory changes and its stable dividend profile, enhancing its investment appeal post-correction [18]