Investment Rating - The industry investment rating is maintained at "Overweight" [7][10]. Core Insights - The report highlights a marginal recovery in inclusive microfinance and real estate loans, with overall credit growth aligning with expectations. Corporate loans are the main driver of credit growth, while technology sector loans are particularly strong [9][31]. Summary by Sections 1. Industry Performance - As of the end of Q2 2025, the total balance of RMB loans reached 268.56 trillion yuan, reflecting a year-on-year growth of 7.1%. Corporate loans increased by 8.6% to 182.47 trillion yuan, with short-term loans and bill financing growing faster than medium- and long-term loans [7][28]. - Household loans totaled 84.01 trillion yuan, growing by 3%, with operating loans up by 5.4% and consumption loans (excluding housing) up by 6% [30]. 2. Loan Growth Dynamics - Medium- and long-term loans in the industrial and infrastructure sectors continue to grow rapidly, supporting stable credit expansion. Industrial medium- and long-term loans reached 26.27 trillion yuan, up 10.7%, while infrastructure-related loans grew by 7.4% to 43.11 trillion yuan [30]. - Inclusive microfinance loans reached 35.57 trillion yuan, with a year-on-year growth of 12.3%. Loans to technology SMEs grew by 22.9%, significantly above the average [8][30]. 3. Real Estate Loan Trends - Real estate loan growth is recovering, primarily due to a narrowing decline in personal housing loans. The balance of development loans was 13.81 trillion yuan, up 0.3%, while personal housing loans totaled 37.74 trillion yuan, with a decline of only 0.1% [8][30]. 4. Future Outlook - The report anticipates that structural tools and support for micro-enterprise financing will continue to drive loan demand. Policies supporting housing fund loans are expected to aid the recovery of the real estate market, while consumer finance services are likely to strengthen personal loan issuance [9][31]. 5. Investment Recommendations - With supportive fiscal policies and financing arrangements, bank credit supply is expected to remain relatively stable. The report suggests focusing on "high dividend + regional growth" strategies for bank stocks, particularly large state-owned banks and quality regional banks with dividend growth potential [10][33].

Group 1 - As of the end of Q2 2025, the total balance of RMB loans from financial institutions reached 268.56 trillion yuan, with a year-on-year growth of 7.1%, and an increase of 12.92 trillion yuan in the first half of the year [2] - The balance of real estate loans at the end of Q2 2025 was 53.33 trillion yuan, showing a year-on-year growth of 0.4%, with an increase of 416.6 billion yuan in the first half of the year [2] - The balance of personal housing loans was 37.74 trillion yuan, a slight year-on-year decline of 0.1%, but with an increase of 51 billion yuan in the first half of the year [2] Group 2 - The number of technology-based small and medium-sized enterprises receiving loan support reached 274,000, with a loan acquisition rate of 50%, an increase of 3.2 percentage points compared to the same period last year [3] - The balance of loans for technology-based small and medium-sized enterprises was 3.46 trillion yuan, with a year-on-year growth of 22.9%, outpacing the growth of all loans by 16.1 percentage points [3] - The number of high-tech enterprises receiving loan support was 266,800, with a loan acquisition rate of 57.6%, an increase of 1 percentage point compared to the same period last year [3]

Core Viewpoint - The overall balance of RMB loans in financial institutions reached 268.56 trillion yuan by the end of Q2 2025, with a year-on-year growth of 7.1% and an increase of 12.92 trillion yuan in the first half of the year [1] Group 1: Corporate Loans - The balance of corporate loans in both domestic and foreign currencies reached 182.47 trillion yuan by the end of Q2 2025, with a year-on-year growth of 8.6% and an increase of 11.5 trillion yuan in the first half of the year [2] - Short-term loans and bill financing balance was 62.04 trillion yuan, growing by 9.4% year-on-year, with an increase of 4.25 trillion yuan in the first half [2] - Medium and long-term loans balance was 116.79 trillion yuan, with a year-on-year growth of 8.3%, increasing by 7.08 trillion yuan in the first half [2] Group 2: Industrial and Infrastructure Loans - The balance of medium and long-term loans for the industrial sector reached 26.27 trillion yuan, with a year-on-year growth of 10.7%, increasing by 1.74 trillion yuan in the first half [3] - Medium and long-term loans for the service industry reached 71.62 trillion yuan, growing by 6.8% year-on-year, with an increase of 3.99 trillion yuan in the first half [3] - Medium and long-term loans for infrastructure-related industries reached 43.11 trillion yuan, with a year-on-year growth of 7.4%, increasing by 2.18 trillion yuan in the first half [3] Group 3: Inclusive and Green Loans - The balance of inclusive micro and small loans reached 35.57 trillion yuan, with a year-on-year growth of 12.3%, increasing by 2.63 trillion yuan in the first half [4] - The balance of green loans reached 42.39 trillion yuan, growing by 14.4% since the beginning of the year, with an increase of 5.35 trillion yuan in the first half [5] - Loans for infrastructure green upgrades, energy low-carbon transitions, and ecological protection reached 18.75 trillion yuan, 8.25 trillion yuan, and 4.95 trillion yuan respectively, with significant increases in the first half [5] Group 4: Agricultural Loans - The balance of agricultural loans reached 53.19 trillion yuan, with a year-on-year growth of 7.4%, increasing by 3.07 trillion yuan in the first half [6] - Rural loans reached 38.95 trillion yuan, growing by 7.4% year-on-year, with an increase of 2.15 trillion yuan in the first half [6] - Agricultural loans balance was 6.9 trillion yuan, with a year-on-year growth of 8.1%, increasing by 5.451 trillion yuan in the first half [6] Group 5: Real Estate Loans - The balance of real estate loans reached 53.33 trillion yuan, with a year-on-year growth of 0.4%, increasing by 4.166 trillion yuan in the first half [7] - Real estate development loans reached 13.81 trillion yuan, growing by 0.3% year-on-year, with an increase of 2.926 trillion yuan in the first half [7] - Personal housing loans balance was 37.74 trillion yuan, with a slight year-on-year decline of 0.1%, but an increase of 510 billion yuan in the first half [7] Group 6: Support for Technology Enterprises - A total of 27.4 million technology-based SMEs received loan support, with a loan acquisition rate of 50%, up by 3.2 percentage points year-on-year [8] - The balance of loans for technology-based SMEs reached 3.46 trillion yuan, with a year-on-year growth of 22.9%, significantly higher than the overall loan growth [8] - High-tech enterprises received support with a loan balance of 18.78 trillion yuan, growing by 8.2% year-on-year, which is 1.4 percentage points higher than the overall loan growth [9] Group 7: Household Consumption Loans - The balance of household loans reached 84.01 trillion yuan, with a year-on-year growth of 3%, increasing by 1.17 trillion yuan in the first half [10] - Operating loans balance was 25.09 trillion yuan, growing by 5.4% year-on-year, with an increase of 923.8 billion yuan in the first half [10] - Consumption loans excluding personal housing loans reached 21.18 trillion yuan, with a year-on-year growth of 6%, increasing by 195 billion yuan in the first half [10]

Investment Rating - The industry investment rating is "Positive" and maintained [8] Core Insights - As of the week ending May 30, the banking index has increased by 0.1%, outperforming the CSI 300 index by 1.2% and the ChiNext index by 1.5%. The market's focus on bank stocks has notably increased due to active fund allocation, with a continued upward trend in the sector, particularly for city commercial banks with relatively strong performance [3][14] - The growth rate of real estate loans has turned positive for the first time since the end of Q3 2023, with a year-on-year increase of 0.04% as of the end of March, primarily driven by a recovery in mortgage demand. In Q1, new personal housing loans amounted to 2,144 billion, a year-on-year increase of 2,093 billion, mainly due to a rebound in second-hand housing sales and improved early repayments [4][30] - Recently, the inclusion of Chongqing Rural Commercial Bank and Shanghai Rural Commercial Bank into the CSI 300 index is expected to attract more index funds, providing a positive outlook for these constituent stocks [5][44] - The focus on convertible bond banks is increasing, with significant valuation recovery and trading opportunities. Hangzhou Bank's stock price has risen significantly after triggering the strong redemption clause for its convertible bonds, indicating high investor confidence [6][44] Summary by Sections Banking Sector Performance - The banking index has shown a cumulative increase of 0.1% as of May 30, outperforming the CSI 300 index by 1.2% and the ChiNext index by 1.5% [3][14] - Individual stocks such as Hangzhou Bank have led the gains, with its stock price reaching a new high after the convertible bond triggered strong redemption conditions [3][14] Loan Trends - The growth rate of real estate loans has turned positive, with a year-on-year increase of 0.04% as of the end of March, driven by a recovery in mortgage demand [4][30] - In Q1, new personal housing loans totaled 2,144 billion, a year-on-year increase of 2,093 billion, attributed to improved second-hand housing sales and early repayments [4][30] Index Adjustments - Chongqing Rural Commercial Bank and Shanghai Rural Commercial Bank have been included in the CSI 300 index, effective June 13, 2025, which is expected to lead to increased capital inflow into these stocks [5][44] Convertible Bonds - The focus on banks issuing convertible bonds has intensified, with Hangzhou Bank's stock price showing significant gains after the strong redemption clause was triggered [6][44]

Core Viewpoint - The Chinese government is implementing a package of eight incremental financial policies aimed at stabilizing the market and expectations, focusing on key economic issues and long-term development [1][6]. Group 1: Incremental Policies - The eight incremental policies include the introduction of financing systems compatible with new real estate development models to stabilize the real estate market [3][4]. - Expansion of the long-term investment pilot program for insurance funds to introduce more incremental capital into the market [3][9]. - Adjustment of regulatory rules to lower investment risk factors for insurance companies in the stock market, supporting capital market stability [4][9]. - Implementation of a comprehensive policy to support financing for small and private enterprises, enhancing coordination in financing efforts [4][6]. - Development of policies to support foreign trade, providing targeted services to businesses affected by tariffs [4][10]. - Revision of merger loan management methods to promote industrial transformation and upgrading [5]. - Expansion of the establishment of financial asset investment companies to increase investment in technology innovation enterprises [5][11]. - Formulation of high-quality development opinions for technology insurance to better support technological innovation [6][13]. Group 2: Market Stability - In the real estate sector, the financial regulatory authority is enhancing the financing coordination mechanism to support the completion of housing projects, with approved loans increasing to 6.7 trillion yuan, aiding over 16 million housing units [7][8]. - The first quarter of this year saw an increase of over 750 billion yuan in real estate loans, with new personal housing loans reaching the highest quarterly increase since 2022 [7][8]. - For the stock market, the financial regulatory authority has initiated reforms to allow insurance funds to invest more in equities, with plans to approve an additional 60 billion yuan for market liquidity [9][10]. - The insurance funds currently invest over 4.4 trillion yuan in stocks and equity funds, with a focus on optimizing asset allocation to enhance support for the real economy [9][10]. Group 3: Support for Technology and Innovation - The financial asset investment company initiative aims to enhance support for technology enterprises, with signed investment intentions exceeding 380 billion yuan [11][12]. - The banking sector is encouraged to adopt a blended financing model for technology enterprises, combining traditional loans with direct investment [12]. - The establishment of technology insurance is expected to improve risk-sharing mechanisms, thereby enhancing the resilience of technological innovation [13].