1. Report Industry Investment Rating No information about the industry investment rating is provided in the given content. 2. Core Viewpoints of the Report - The supply of secondary and perpetual bonds (二永债) is expected to moderately increase in April, breaking the issuance silence since the beginning of the year. The supply is driven by banks' capital - supplementing needs, the demand to meet the Total Loss - Absorbing Capacity (TLAC) gap, and the renewal of expiring bonds. The urgency for state - owned banks to issue secondary and perpetual bonds to supplement capital has been structurally alleviated, and the net supply of state - owned banks' secondary and perpetual bonds in 2026 is expected to remain at a low level [1][19]. - In March, the yields of credit bonds decreased overall. The long - end performance was weaker than the short - end, and the credit spreads widened passively. In April, the credit bond market is expected to show a pattern of "warming demand and moderately increasing supply", which is beneficial for credit bond performance, and the spreads are expected to compress [2]. - For investment strategies, short - term credit bonds can be used as a coupon base, and the duration can be appropriately extended to 4 - 5 years. Institutions with stable liabilities can appropriately allocate ultra - long - term credit bonds of about 7 years. Attention can be paid to the opportunity of excess spread compression of 3 - 5Y medium - and high - grade bank secondary and perpetual bonds [2][40]. 3. Summary According to the Directory 3.1 How to View the Subsequent Supply of Secondary and Perpetual Bonds? 3.1.1 Bank Capital Tool Regulatory Approval Feature Summary - The regulatory approval quota is mainly for national and joint - stock banks, with 2023 being the peak year. Since 2024, the approval quota for secondary and perpetual bonds has declined. The proportion of approval quotas for state - owned banks has decreased in the past two years, while that of joint - stock banks and city commercial banks has increased [11]. - The regulatory approval time has seasonal characteristics. In the past two years, it has been concentrated in Q2 and Q4. Q1 is the off - season for approvals, and the quota proportion is mostly less than 10% [13]. - State - owned banks have a fast first - issuance rhythm after approval but issue in multiple batches. Small and medium - sized banks tend to use most of the approved quota at once [18]. 3.1.2 Outlook for the Subsequent Supply of Secondary and Perpetual Bonds - As of the end of March 2026, the effective approval quota for commercial bank capital tools is 189.79 billion yuan, with 71.41 billion yuan already used. State - owned banks have the most remaining quota [19]. - In April, the supply of secondary and perpetual bonds is expected to moderately increase. On one hand, the capital - supplementing urgency of state - owned banks has been alleviated. On the other hand, the redemption and renewal demand for secondary and perpetual bonds in Q2 is nearly 30 billion yuan, with state - owned and joint - stock banks accounting for 79% [19][20]. 3.2 Review and Outlook of the Credit Bond Market in March - In March, the yields of credit bonds decreased overall. The long - end performance was weaker than the short - end, and the credit spreads widened passively. The yields of most credit bonds decreased, with short - term bonds having a larger decline [24][27]. - The scale of wealth management products decreased, and the net - breaking rate increased. As of the end of March, the full - caliber wealth management scale decreased to 31.14 trillion yuan, and the net - breaking rates of all bank wealth management products and wealth management subsidiaries increased [30]. - In April, the credit bond market is expected to show a pattern of "warming demand and moderately increasing supply", which is beneficial for credit bond performance, and the spreads are expected to compress. Short - term credit bonds can be used as a coupon base, and the duration can be appropriately extended to 4 - 5 years [37][40]. 3.3 Primary Market 3.3.1 Issuance Volume - In March 2026, the issuance scale and net financing scale of credit bonds increased both year - on - year and month - on - month. The issuance scale was 1.6271 trillion yuan, and the net financing was 349.6 billion yuan. The net financing of urban investment bonds was 50.3 billion yuan, and that of industrial bonds and financial bonds was 374.8 billion yuan and - 75.5 billion yuan respectively [44]. 3.3.2 Issuance Term - The average issuance term of credit bonds lengthened month - on - month. From March 1st to March 27th, the average issuance term was 3 years, an increase of 0.23 years compared with February. The average issuance terms of urban investment bonds, industrial bonds, and financial bonds all increased [46]. 3.3.3 Issuance Cost - The average issuance cost of credit bonds decreased month - on - month. From March 1st to March 27th, the average issuance interest rate was 2.07%, a decrease of 2bp compared with February. The average issuance interest rate of urban investment bonds decreased by 5bp, that of industrial bonds remained flat, and that of financial bonds increased by 2bp [49]. 3.3.4 Cancellation of Issuance - In March, the number and scale of cancelled credit bond issuances increased month - on - month. A total of 40 credit bonds were cancelled, with a total scale of 2.1985 billion yuan [52]. 3.4 Secondary Market 3.4.1 Trading Volume - In March, the trading volumes of all types of credit bonds increased month - on - month. Urban investment bonds had the largest increase in trading volume, followed by industrial bonds. The trading terms and implicit ratings of different types of bonds also changed [58]. 3.4.2 Trading Liquidity - In March, the turnover rates of urban investment bonds, industrial bonds, and financial bonds all increased. The turnover rates of all terms of urban investment bonds and industrial bonds increased, and for financial bonds, the turnover rate of the 5 - 7 - year term increased the most [60]. 3.4.3 Spread Tracking - In March, the spreads of urban investment bonds showed different trends. Only the spreads of 3 - year AA(2) - rated, 7 - year all - rated, and 10 - year medium - and low - rated bonds narrowed, while the spreads of other terms widened. The spreads of most AAA - rated and AA - rated industrial bonds widened. The spreads of most bank secondary and perpetual bonds, as well as those of securities and insurance sub - bonds, widened, with the ultra - long - end performing better [66][71][73]. 3.5 Hot Bonds in March - According to the bond liquidity scores, the top 20 urban investment bonds, industrial bonds, and financial bonds in terms of liquidity scores are selected for investors' reference [77]. 3.6 Credit Rating Adjustment Review - In March, the bond ratings of 4 bonds were upgraded, and there was no downgrade [83].

Group 1 - The government work report emphasizes the need to enhance capital replenishment through multiple channels and to manage non-performing assets of financial institutions effectively. It plans to issue special government bonds worth 300 billion yuan to support state-owned commercial banks in capital replenishment [2] - Liu Ya, a representative at the National People's Congress, suggests that under the guidance of national financial regulatory authorities, special bonds for small and medium-sized banks should be issued regularly at the provincial level to establish a long-term capital replenishment mechanism [3] - The capital adequacy ratio of major banks as of Q4 2025 is reported as follows: large commercial banks at 18.16%, joint-stock banks at 13.58%, city commercial banks at 12.39%, and rural commercial banks at 13.18% [3] Group 2 - Over the past four years, 597 banks have received capital injections through special bonds, including 547 rural cooperative institutions and 50 city commercial banks [4] - Provincial governments have utilized special bonds to support the reform and establishment of local commercial banks and rural banks, facilitating risk resolution and development within the provincial financial system [4] - After the injection of special bond funds, provincial governments, as shareholders of small and medium-sized banks, can enhance management of local financial institutions and better coordinate fiscal and financial efforts to support major regional development projects [5]

Investment Rating - The report assigns an "Overweight" rating for the banking sector, indicating an expected performance that exceeds the Shanghai and Shenzhen 300 Index by more than 15% [5][10]. Core Insights - The monetary policy environment for 2026 is expected to remain moderate, with new policy financial tools and structural financial instruments anticipated to further stimulate social financing demand. The capital injection into state-owned banks will enhance their ability to support the real economy [2][5]. - The 2026 government work report plans to issue 4.4 trillion yuan in local government special bonds, maintaining the same level as 2025, focusing on major project construction, replacing hidden debts, and settling government arrears [3]. - The report highlights a proactive fiscal policy, with the issuance of new policy financial instruments expected to reach 800 billion yuan, up from 500 billion yuan in 2025, which will drive total project investment by approximately 7 trillion yuan [5]. - The second round of capital injection for state-owned banks is imminent, with a planned issuance of special government bonds amounting to 300 billion yuan to support capital replenishment. This is expected to increase the core Tier 1 capital adequacy ratio of two major banks by 0.6 percentage points [5]. Summary by Sections Monetary Policy - The report anticipates 1-2 instances of reserve requirement ratio (RRR) cuts or interest rate reductions within the year, with a projected decrease of up to 20 basis points [5]. Fiscal Policy - The report emphasizes the establishment of a 100 billion yuan fund to promote domestic demand through various financial support mechanisms, including loan interest subsidies and risk compensation [5]. Risk Management - Key risk areas identified include real estate, local government debt, and small financial institutions. The report suggests that measures such as the "white list" system for real estate will help mitigate debt default risks [5].

Core Insights - Ping An Life has made substantial progress in its capital replenishment efforts, with registered capital increasing from 33.8 billion to 36.003 billion RMB, indicating the gradual implementation of its previously announced capital increase plan [1][2] Group 1: Capital Increase Details - The increase in registered capital is part of a commitment made in April 2025, where all shareholders planned to inject approximately 20 billion RMB into the company, with 2.2 billion RMB directly added to registered capital and the remaining 17.8 billion RMB expected to enhance net assets through capital reserves [2] - This approach of allocating a small portion to registered capital and a larger portion to capital reserves is common in the insurance industry, aimed at rapidly increasing the company's net asset scale and solidifying actual capital [2] Group 2: Industry Context and Implications - The life insurance sector has been facing dual pressures on both asset and liability sides, with low interest rates compressing asset yields and stricter capital recognition regulations leading to accelerated core capital consumption [4] - As a core profit engine of China Ping An Group, the capital adequacy of Ping An Life is crucial for the overall risk resilience of the group. The 20 billion RMB injection will significantly enhance its comprehensive and core solvency ratios, providing a stronger buffer against potential macroeconomic fluctuations and capital market volatility [4] Group 3: Strategic Importance of Capital - Ample capital is essential for business expansion and strategic transformation, especially as the industry shifts from scale-oriented to value-oriented strategies. This includes deepening the "product + service" model, advancing the construction of a healthcare and elderly care ecosystem, and making longer-term equity asset allocations [5] Group 4: Management Transition - Alongside the capital replenishment, there has been a smooth transition in Ping An Life's senior management, with the retirement of Chairman Yang Zheng and the appointment of Vice Chairman Cai Ting as acting chairman [6] - Cai Ting's rise is seen as a significant step towards the younger and more professional management team, indicating a shift in management focus from deep reforms to a stable and high-quality development phase [7] Group 5: Overall Assessment - The gradual implementation of the 20 billion RMB capital increase and the stable transition of leadership form the current fundamentals of Ping An Life. In a complex environment of rigid liability costs and fluctuating asset yields, a stronger capital base combined with a younger management team positions the company for future growth [8]

Core Viewpoint - Guangzhou Bank is initiating a capital increase and share expansion to address urgent capital supplementation needs, marking a significant step for the bank as it approaches a "trillion" asset scale [1] Group 1: Capital Adequacy and Expansion Plans - The capital adequacy ratio of Guangzhou Bank has declined, with the core Tier 1 capital adequacy ratio dropping to 7.73% as of September 2025, down from over 9.1% during 2021-2024 [3] - The bank has previously completed seven rounds of capital increases since its establishment, with a notable 100 billion yuan increase in 2018 [3] - This capital increase will be the second major capital supplementation since the bank's renaming in 2009, raising market interest in its ability to alleviate capital pressure [3] Group 2: Strategic Adjustments and IPO Withdrawal - The capital increase plan follows the bank's withdrawal of its A-share IPO application in January 2025, which was perceived as a strategic adjustment amid increasing capital pressure [4] - The bank's IPO journey has faced multiple setbacks, with initial plans for listing dating back to 2009, and the application was ultimately withdrawn due to expired financial documents [4] Group 3: Industry Context and Challenges - The case of Guangzhou Bank reflects a broader trend among small and medium-sized banks, with six banks having withdrawn their IPO applications since the shift to a registration-based review system in March 2023 [5] - The tightening regulatory environment and changing market conditions have limited capital supplementation channels for these banks, making capital increases a common choice [5][6] - Future challenges for Guangzhou Bank include optimizing its equity structure while balancing shareholder interests and exploring diverse capital supplementation methods, such as issuing subordinated debt and perpetual bonds [7]

Core Viewpoint - The A-share market experienced a positive start to the year, but bank stocks continued to be underperformers, reflecting ongoing concerns about credit quality and lending dynamics in the context of stable LPR rates and lower-than-expected credit growth [2][3][4]. Market Performance - On the first trading day of the year, the Shanghai Composite Index rose by 0.87% to 4117.41 points, while the Shenzhen Component increased by 1.36% and the ChiNext Index by 0.99% [3]. - The banking sector saw a decline of 0.24%, with more stocks falling than rising, indicating a divergence in performance compared to other sectors [3]. - The China Securities Banking Index has retreated nearly 16% from its peak in July 2022, contrasting with an 18% rise in the broader market during the same period [3]. Credit and Lending Dynamics - The latest financial data revealed that new RMB loans in January amounted to 4.71 trillion yuan, lower than the 5.13 trillion yuan recorded in January 2022, indicating a year-on-year decrease in credit growth [3][4]. - The social financing scale increased by 7.22 trillion yuan in January, with a notable decline in loans to the real economy, which increased by 4.9 trillion yuan, down by 317.8 billion yuan year-on-year [3][4]. Institutional Research Focus - Institutional interest in bank research has decreased compared to previous years, with 16 banks undergoing 63 institutional surveys in 2023, involving 467 institutions, compared to 20 banks and 92 surveys in the same period last year [6]. - Key areas of focus during these surveys included credit quality, liability management under margin pressure, capital replenishment plans, and asset quality outlook [6][7]. Future Outlook and Strategies - Analysts predict that the trend of prioritizing credit quality over quantity will become more pronounced in 2023, with significant attention on post-Spring Festival operational rhythms and consumer spending [4][5]. - Banks are expected to enhance their non-interest income sources, with strategies including the promotion of wealth management products and diversified capital replenishment channels to address ongoing profitability pressures [8][9].

Core Viewpoint - The enthusiasm for institutional research on banks has declined compared to previous years, with a focus on credit quality and the impact of interest rate spreads on profitability [1][6]. Group 1: Market Performance - On the first trading day of the Year of the Horse, the A-share market saw a rise, with the Shanghai Composite Index up 0.87% and the Shenzhen Component Index up 1.36%, while the banking sector fell by 0.24% [2]. - The banking sector has experienced a divergence in performance, with state-owned banks declining while some regional banks have shown improvement [2]. - The China Securities Banking Index has retreated nearly 16% from its peak in July 2022, while the broader market has increased by nearly 18% during the same period [2]. Group 2: Credit and Monetary Policy - The latest LPR remained unchanged for both the 1-year and 5-year terms, marking a period of stability in interest rates [3]. - In January, new RMB loans totaled 4.71 trillion yuan, lower than the 5.13 trillion yuan in January 2022, indicating a slowdown in credit growth [2][3]. - The People's Bank of China (PBOC) is expected to maintain liquidity support through MLF operations, with a net injection of 300 billion yuan in February [3][4]. Group 3: Institutional Research Focus - Institutional research has shown a preference for banks in economically promising regions, with a significant number of surveys conducted on smaller banks in the Yangtze River Delta [6]. - Key areas of focus during institutional surveys include credit demand, interest margin pressures, capital adequacy, and asset quality outlook [6][7]. - The trend of "deposit migration" towards equity markets is noted, with banks expected to enhance their wealth management and middle-income sources [4][7]. Group 4: Profitability and Capital Management - Banks are under pressure regarding profitability, with institutions increasingly inquiring about capital adequacy and internal capital replenishment strategies [8]. - Several banks plan to explore diverse capital replenishment channels, including issuing capital-boosting bonds and optimizing business structures to enhance capital efficiency [8].

Core Viewpoint - Luzhou Bank is navigating a complex operating environment while maintaining a solid foundation for long-term high-quality development, supported by a strong shareholder base, optimized asset structure, and proactive risk management measures [1][6]. Shareholder Actions - Luzhou Bank's major shareholder, FAN YUE, recently cashed out approximately HKD 70.27 million, which is viewed as a normal capital operation based on personal financial planning, with the shareholder still holding a 9.95% stake, indicating confidence in the bank's long-term value [1]. - The bank's top five shareholders collectively hold 51.83% of the shares, with stable support from state-owned and well-known enterprises, providing a robust shareholder background that enhances strategic stability [1]. Capital Management - The bank has postponed its H-share capital increase plan, reflecting a cautious approach to shareholder interests and market timing. The core Tier 1 capital adequacy ratio stands at 8.01%, below the commercial bank average but above the regulatory requirement of 5% for non-systemically important banks, indicating a safe zone [2]. - The decision to delay the capital increase is strategic, allowing for better alignment with market conditions and the bank's development phase, thus avoiding dilution during market volatility [2]. Revenue and Asset Quality - Despite short-term revenue fluctuations, Luzhou Bank's core business remains strong, with revenue of CNY 2.423 billion and CNY 3.573 billion for the first half and third quarter of 2025, respectively. Net interest income contributed CNY 1.897 billion, accounting for 78.30% of total revenue, showcasing the resilience of traditional lending [2]. - Customer deposits reached CNY 155.082 billion, a 14.61% increase year-on-year, representing 86.51% of total liabilities, reflecting regional market trust and providing a stable funding source for lending [2]. Loan Growth and Risk Management - The total customer loan amount increased by 13.15% year-on-year to CNY 117.594 billion, with corporate loans making up 88.26%, focusing on key regional industries like leasing, business services, and construction [3]. - The non-performing loan (NPL) ratio remains low at 1.18%, slightly decreasing by 0.01 percentage points, indicating effective risk pricing and post-lending management [3]. - Luzhou Bank is proactively addressing an 8.18 billion CNY corporate loan risk exposure by initiating risk mitigation measures, including asset acquisition and restructuring, demonstrating a commitment to active risk management [3][4]. Strategic Initiatives - The bank's special resolution to authorize the board to formulate restructuring plans is a key move towards standardized and market-oriented risk management, leveraging state-owned enterprises' resources to enhance asset recovery value [4]. - The bank's approach to early identification and management of risks contrasts with passive strategies, aiming for a win-win situation for the bank, enterprises, and local economies [4]. Long-term Outlook - Luzhou Bank's long-term advantages include a solid industrial foundation and regional economic vitality, providing natural geographic advantages and customer loyalty in the local credit market [5]. - The stable shareholding structure from state-owned shareholders facilitates policy support and business expansion, while the bank's market-oriented risk management approach enhances its resilience to challenges [5][6]. - With the timely advancement of capital replenishment plans, effective resolution of non-performing assets, and gradual development of intermediary businesses, Luzhou Bank is expected to improve its revenue structure and core competitiveness [6].

Group 1: Executive Changes - The executive director Xu Yong resigned due to reaching retirement age, effective February 10, 2026 [2] - Non-executive directors Zhang Xin and Huang Chongying received approval from the Sichuan Regulatory Bureau of the National Financial Supervisory Administration on February 9, 2026, and began their roles immediately [2] Group 2: Company Structure and Governance - As of December 2025, the registered capital of Yibin Bank increased to 4.5884 billion yuan, marking the first core capital replenishment since its listing, with an improved capital adequacy ratio [3] - Recent board adjustments aim to enhance decision-making efficiency, aligning with the trend of stabilizing the management team following the appointment of the new president Guo Hua in January 2026 [3] Group 3: Industry Policies and Environment - On February 12, 2026, the Hong Kong Monetary Authority emphasized credit risk management as a primary task and promoted regulations for innovative businesses such as digital assets, which may impact risk control and business expansion for Yibin Bank and other Hong Kong-listed banks [4]

Group 1: Loan Allocation and Industry Focus - The bank's corporate loans primarily target industries such as manufacturing, wholesale and retail, and leasing and business services, aligning with national industrial policies and local economic strategies [2][3] - The bank emphasizes enhancing financial service quality to support enterprises in technological upgrades, capacity enhancements, and digital transformations [3] Group 2: Capital Adequacy and Future Plans - As of September 2025, the bank's core Tier 1 capital adequacy ratio is 11.06%, Tier 1 capital adequacy ratio is 12.32%, and total capital adequacy ratio is 13.49%, indicating a strong capital position [3] - The bank plans to explore diverse capital replenishment channels, including the issuance of capital-boosting bonds, to better serve the regional real economy [3]