Core Viewpoint - The recent adjustment of deposit rates by banks, particularly the removal of 5-year fixed deposit products by smaller banks, reflects a strategic response to the current declining interest rate environment and regulatory pressures [1][2]. Group 1: Deposit Rate Adjustments - The Tongmu Teqi Mengyin Village Bank has announced a reduction in deposit rates for terms ranging from 3 months to 3 years, while also canceling the 5-year fixed deposit option [1]. - Major state-owned and joint-stock banks still offer 5-year fixed deposits, with China Bank's rate at 1.6% [1]. - The decision to eliminate 5-year deposits is primarily seen in smaller banks, indicating a divergence in strategies based on bank size and regulatory constraints [1]. Group 2: Interest Rate Environment - The current interest rate is in a downward cycle, leading banks to avoid locking in long-term deposits at higher costs, which could increase interest rate risk and operational pressure [1]. - There is a notable trend of interest rate inversion for 3-year and 5-year deposits in some smaller banks, suggesting a market-driven adjustment to optimize liability structures and reduce costs [2]. Group 3: Alternative Investment Options - In light of reduced availability or lower rates for 5-year deposits, banks and financial markets continue to offer stable alternatives such as 3-year fixed deposits or large-denomination certificates of deposit, which maintain similar safety and yield characteristics [3]. - For investors seeking long-term returns, government bonds (e.g., electronic savings bonds) are recommended as a secure alternative to fixed deposits, providing clear yields and high safety [3].

Investment Rating - The report maintains a "Buy" rating for Ping An Bank [2] Core Views - The bank's revenue for the first half of 2025 decreased by 10% year-on-year, with a net profit attributable to shareholders down by 3.9% [5][7] - The bank's asset quality remains in line with expectations, with a slight decrease in the non-performing loan ratio to 1.05% and an increase in the provision coverage ratio to 238% [5][9] - The report highlights a shift in focus towards credit structure adjustment, indicating that the reduction in high-risk retail loans may be entering its later stages [7][9] Financial Data and Earnings Forecast - Total revenue is projected to decline from 164,699 million in 2023 to 134,676.6 million in 2025, with a year-on-year growth rate of -8.19% [6] - Net profit attributable to shareholders is expected to decrease slightly from 46,455 million in 2023 to 44,109.44 million in 2025, reflecting a year-on-year growth rate of -0.90% [6] - The bank's return on equity (ROE) is forecasted to decline from 11.37% in 2023 to 9.39% in 2025 [6] Revenue and Profitability Analysis - The decline in net interest income continues to pressure revenue, with a 9% year-on-year decrease in the first half of 2025 [7][8] - Non-interest income also saw a decline of 11% year-on-year, but the rate of decline has slowed compared to previous quarters [7] - The bank's net interest margin is reported at 1.8%, down 16 basis points year-on-year, with expectations of further pressure on loan pricing [9][12] Loan and Asset Quality - The bank's non-performing loan generation rate is estimated at 1.66% for the first half of 2025, a decrease of 20 basis points compared to 2024 [9] - The report indicates a continued focus on reducing high-risk retail loans, with a significant reduction in the volume of such loans observed [7][10] - The bank's total loans decreased by 0.1% year-on-year in the second quarter of 2025, with a net reduction of approximately 32 billion [7][10] Dividend Policy - The bank plans to maintain its mid-term dividend at 2.36 yuan per 10 shares, corresponding to a dividend payout ratio of 20.1% [7][9]