Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The report highlights that the net interest margin for commercial banks has shown signs of stabilization, with a net interest margin of 1.42% in H1 2025, indicating a slowdown in the decline [3][4] - The report notes a year-on-year decline in net profit for commercial banks of 1.2%, but the decline has narrowed compared to Q1, suggesting a recovery in profitability [3][10] - The report emphasizes that the asset and liability growth rates for commercial banks have accelerated, driven mainly by financial investments, while loan growth remains weak [6][9] Summary by Sections Industry Overview - The total assets and liabilities of commercial banks grew by 8.9% and 9.0% year-on-year, respectively, in Q2 2025, showing a faster pace compared to Q1 [3][9] - The non-performing loan (NPL) ratio decreased to 1.49%, down 2 basis points from the previous quarter, indicating ongoing risk improvement [3][7] Profitability Analysis - The net profit growth for state-owned banks was 1.1%, with an improvement of 0.8 percentage points from Q1, while joint-stock banks and city commercial banks saw declines of 2.0% and 1.1%, respectively [3][10] - The report estimates a revenue growth of 3.2% for Q2, with a slight increase in net interest margin pressure [10][12] Risk Assessment - The report indicates that the NPL amount and ratio for commercial banks have both decreased, with a notable reduction in the NPL ratio for rural commercial banks [7][11] - The provision coverage ratio for commercial banks increased to 212.0%, reflecting a cautious approach to managing credit risk [7][11] Investment Recommendations - The report suggests that the low interest rate environment continues to support the dividend logic, recommending banks such as CITIC Bank, Construction Bank, Agricultural Bank, and others as potential beneficiaries [8]