Core Viewpoint - The banking sector is expected to maintain relative stability in its fundamentals despite a low operating environment, with a lower-than-expected decline in net interest margins in Q1 2025 due to stable benchmark interest rates [1] Investment Outlook - The banking sector shows robust relative value compared to most industries, with a focus on banks with stable dividend yields and strong earnings growth potential over the next three years [1] - There is a recommendation to pay attention to undervalued banks that have shown recovery since the beginning of the year, while previously strong stocks still have room for valuation improvement [1] Market Scale - As of the end of Q1 2025, the total scale of wealth management products decreased by 0.81 trillion yuan compared to the beginning of the year, with a total outstanding scale of 29.14 trillion yuan, reflecting a year-on-year growth of 9.41% [2] - The overall market sentiment for wealth management remains low, influenced by significant fluctuations in the bond market, leading to lower average annualized returns for fixed-income products [2] Product Characteristics - Fixed-income products continue to dominate the market, accounting for 97.22% of the total outstanding scale, while the proportion of open-ended products has slightly increased [3] - As of Q1 2025, the outstanding scale of open-ended and closed-end wealth management products was 23.62 trillion yuan and 5.52 trillion yuan, respectively [3] Asset Allocation - There has been a noticeable increase in the allocation to interbank assets while reducing deposits and interbank certificates of deposit [4] - The proportion of deposits has decreased by 0.6 percentage points in Q1 2025, continuing a trend from the previous year [4] Investor and Channel Development - The number of investors holding wealth management products has increased to 126 million, a year-on-year growth of 6.73% [6] - The number of institutions selling wealth management products has also expanded, with 575 institutions participating as of March 2025 [6] Policy Environment - The recent political bureau meeting emphasized the implementation of more proactive macro policies to stabilize the banking sector's fundamentals [7] - Measures include potential interest rate cuts and support for struggling enterprises, which are expected to help mitigate loan risk for banks [7]