Investment Rating - The investment rating for the banking industry is "Positive" and is maintained [10] Core Insights - The A-share risk appetite has temporarily rebounded, with the banking index lagging behind, while H-shares of major banks have outperformed. The proportion of southbound holdings has increased, indicating a sustained interest in H-shares due to their undervaluation and high dividend characteristics [2][9] - The central bank's report for Q3 2025 indicates a negative growth rate for real estate loans, with a year-on-year decline of 0.1%. This marks the first negative growth in real estate development loans since Q2 2022, primarily driven by weak sales [6][7][39] - The performance of banks that have disclosed their Q3 results shows an upward trend in profit growth, with interest income rebounding. Chongqing Bank reported a surprising growth of over 10% in the first three quarters [8][49] Summary by Sections Banking Index Performance - The banking index rose by 1.3% this week, underperforming compared to the CSI 300 and ChiNext indices, which saw excess returns of -1.9% and -6.7% respectively. Agricultural Bank of China H-shares led the gains with a 7.9% increase, while the A/H share growth for Agricultural Bank reached 56.4% and 43.6% respectively [2][9][18] Loan Trends - The central bank's Q3 report shows that the proportion of corporate loans has increased, while industrial medium- and long-term loan growth has declined to 9.7%, down 1.5 percentage points from the previous quarter. Real estate loans have turned negative, with development loans down 1.3% year-on-year, reflecting weak sales [6][38][39] - Personal housing loans also saw a year-on-year decline of 0.3%, with a net decrease of 292.1 billion yuan in Q3, indicating ongoing weakness in the housing market [7][39] Bank Earnings Reports - As of October 24, banks such as Huaxia Bank, Ping An Bank, and Chongqing Bank have reported their Q3 earnings. Chongqing Bank's performance exceeded expectations with over 10% growth, while Huaxia and Ping An faced challenges due to non-interest income declines [8][49][51] Market Dynamics - The market dynamics indicate a recovery in trading volumes and turnover rates for bank stocks, with a notable increase in the turnover rate for joint-stock banks. The overall trading environment for bank stocks is expected to improve as previous funding pressures ease [29][30]

Investment Rating - The report maintains a positive outlook on the banking sector, indicating a stable performance with expected revenue growth and profit increase for listed banks in Q3 2025 [3][4]. Core Insights - The banking sector is projected to experience a slight slowdown in revenue growth, with a forecasted year-on-year increase of 0.6% for the first nine months of 2025, compared to a 1% growth in the first half of 2025. Net profit attributable to shareholders is expected to grow by 0.8% year-on-year [3][4]. - State-owned banks and joint-stock banks are expected to maintain stable growth, while regional banks are anticipated to lead in profit growth, particularly in high-quality regions such as Jiangsu and Sichuan [3][4]. - The report highlights three core supports for stable profitability: the stabilization of net interest income, recovery of non-interest income from low levels, and stable asset quality ensuring sustainable profits [3][4]. Revenue and Profit Forecast - For Q3 2025, state-owned banks are expected to see revenue growth of 1.3%, while joint-stock banks may experience a revenue decline of 2.4%. In contrast, city commercial banks are projected to achieve revenue and net profit growth of 5.8% and 8.2%, respectively [3][5]. - The report anticipates that the average loan interest rate for listed banks will stabilize around 3.7%, with a significant reduction in deposit costs contributing to this stability [4][5]. Non-Interest Income Analysis - The report notes that while non-interest income may decline by 10-20% in Q3 2025 due to rising bond market interest rates, the overall impact on cumulative revenue is expected to be limited due to favorable year-on-year comparisons [3][4]. - The recovery of fee income is highlighted as a potential driver for revenue improvement, with a projected year-on-year increase of 3% in non-interest income for the first half of 2025 [3][4]. Credit Growth and Asset Quality - Credit growth is expected to slow, with a year-on-year increase of approximately 6.6% in RMB loans as of August 2025. The report indicates a cautious approach to retail lending, with a focus on corporate lending [3][4]. - The non-performing loan (NPL) ratio is projected to remain stable at around 1.22%, with a slight decrease in the provision coverage ratio to 238% [4][5]. Investment Recommendations - The report suggests a focus on leading banks and high-quality regional banks as key investment opportunities, emphasizing the importance of stable earnings growth as a foundation for value recovery in the banking sector [4][5].

Investment Rating - The report maintains a "Positive" outlook on the banking industry for the third quarter of 2025, anticipating steady performance and a return to value [1]. Core Insights - The report predicts that listed banks will show "slight revenue growth slowdown, with profits maintaining a positive growth trend," with a focus on stability. It estimates a 0.6% year-on-year revenue growth for the first nine months of 2025 and a 0.8% growth in net profit attributable to shareholders [2][3]. - The banking sector's profitability is supported by three core factors: stabilization of net interest income, recovery of non-interest income from low levels, and stable asset quality ensuring sustainable profits. Regulatory support for the health of bank balance sheets is also highlighted [2][3]. - The report emphasizes that while non-interest income may face pressure due to rising bond market rates, the overall impact on cumulative revenue is expected to be limited due to favorable year-on-year comparisons [2][3]. - The report suggests that banks can expect improvements in net interest income, driven by a significant decline in funding costs, which will help offset the downward pressure on asset pricing [3]. Summary by Sections Revenue and Profit Forecast - For the first nine months of 2025, state-owned banks are expected to see a revenue growth of 1.3%, while joint-stock banks may experience a revenue decline of 2.4%. In contrast, city commercial banks are projected to achieve a revenue growth of 5.8% and a net profit growth of 8.2% [2][4]. - The report provides detailed forecasts for various banks, indicating a mixed performance across the sector, with some banks like Agricultural Bank and Bank of Communications showing positive trends while others like Ping An Bank are expected to decline [4]. Non-Interest Income and Market Conditions - The report notes that while non-interest income may decline by 10-20% in the third quarter, cumulative figures for the year are expected to show positive growth due to a favorable comparison base [2][3]. - The report highlights that banks are likely to benefit from improved market sentiment and a recovery in fee income, which had previously faced downward pressure [2][3]. Credit Growth and Asset Quality - Credit growth is expected to stabilize, with a focus on corporate lending over retail, as banks prepare for future lending needs. The report indicates that as of August, the year-on-year growth rate of RMB loans was approximately 6.6% [2][3]. - The report anticipates that the non-performing loan (NPL) ratio will remain stable, with a projected NPL ratio of 1.22% for the third quarter of 2025, and a slight decrease in the provision coverage ratio to 238% [3]. Investment Recommendations - The report suggests that the banking sector's dividend yield has returned to an attractive range, with stable profit growth being a cornerstone for value recovery. It recommends focusing on leading banks and quality city commercial banks for investment opportunities [3].