Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - A steepening bond market trend in the past is a reference. In the first half of 2009, there was a notable "short - end down, long - end up" situation in 1y and 10y treasury bonds, similar to March this year. The key is to judge the trend of credit expansion. If credit expansion is weak, the long - end interest rate has a clear ceiling and will reverse after adjustment. For now, the weak bill rate in March indicates that credit投放 momentum is hard to sustain, and the net financing of government bonds has no significant increase. So, the social financing growth rate is likely to decline in the second quarter, presenting a long - end trend opportunity [1]. - After the curve steepens, two key factors are the central bank's support and credit expansion. Without credit expansion, economic stabilization may not be sustainable, and long - end yields are likely to decline, leading to a "compressing spread" (bull steepening) scenario [2][10]. Summary of Each Section According to the Table of Contents 1 Curve Steepening: Key Considerations - The situation in March this year is similar to that in the first half of 2009. The central bank's sufficient liquidity injection and continuous support led to short - end yields following the funds and moving lower. Meanwhile, long - end yields oscillated upward as they were influenced by economic recovery and inflation expectations [7][8]. - After the curve steepens, two crucial factors are the central bank's stance and credit expansion. As long as the global political situation is complex and the financial market is volatile, the central bank is likely to maintain stability. Credit expansion is crucial for economic recovery, and it can crowd out bond - allocating funds and affect market expectations. Without credit expansion, long - end rates are more likely to decline, and the bond market still has trend opportunities [2][10][11]. 2 Steepening Market in the First Half of 2009 2.1 Prelude: Policy Shift Caused by the 2008 Subprime Mortgage Crisis and Curve "Bull Steepening" - In July 2008, the Politburo meeting focused on controlling inflation. However, after the subprime mortgage crisis fully erupted in September 2008, economic data deteriorated significantly, and the policy shifted to "stable growth" [13][14]. - The government adopted "broad fiscal + broad monetary" policies. The central bank cut the reserve requirement ratio three times, lowered interest rates four times, and carried out open - market operations. The government also launched a 4 - trillion - yuan stimulus plan, leading to an increase in long - term bond issuance. The yield curve showed a bull - steepening pattern starting from October 2008 [16][17][20]. 2.2 How Did the Bull Steepening Market in 2009 Unfold? 2.2.1 Steepening from January to July 2009: "Stable Low - level Funding Rates + Recovery Expectations" - Short - end: The release of reserve - requirement - cut funds and the high degree of deposit current - account conversion led to low - level funding rates. Although the central bank did not cut the reserve requirement ratio or interest rates in the first half of 2009, it continued to support the market. The 1 - year treasury bond rate oscillated in the range of 0.90% - 1.00% from March to June, after adjustments in January and February [28][29]. - Long - end: The market was caught in a tug - of - war over "recovery expectations." At the beginning of the year, the better - than - expected credit data led to a short - term recovery trade in the bond market. However, due to the ample funds of allocation - oriented investors, long - term bond rates oscillated until the end of May when they started to rise again [32]. 2.2.2 From July to December 2009: The Central Bank Exited "Excessive Easing" + Long - Term Bonds Were Traded Based on Economic Recovery Expectations - Short - end: In July, the central bank restarted the issuance of 1 - year central bank bills, indicating a shift from excessive easing to a tighter monetary policy. The 1 - year short - term bond rate rose from around 0.98% to around 1.49% by the end of the year [39]. - Long - end: Interest rates oscillated upward following economic expectations. The 10 - year treasury bond rate fluctuated due to factors such as economic data, bond supply, and inflation expectations. By the end of December, the 10 - year treasury bond yield was around 3.64% [42][45][46].

Core Viewpoint - The company held its first extraordinary general meeting of shareholders in 2026, where no new, changed, or rejected proposals were presented, and previous resolutions remained unchanged [2][10]. Meeting Details - The meeting was held on February 27, 2026, with a physical meeting at 15:00 and online voting available from 9:15 to 15:00 on the same day [3][4][5]. - The meeting was convened by the company's board of directors and presided over by Chairman Liu Chaodong [6][7]. - A total of 638 shareholders and representatives attended the meeting, representing 1,064,853,412 shares, which is 55.0288% of the total voting shares [8]. Proposal Review and Voting Results - The shareholders approved the proposal regarding the general authorization for domestic debt financing instruments, allowing the company to issue up to 20 billion yuan in debt instruments [11]. - The types of debt financing instruments include financial bonds, corporate bonds, subordinated bonds, and other regulatory-approved varieties [12]. - The maximum term for these debt instruments is set at 10 years, with specific terms determined based on market conditions [14]. - The voting results showed that 1,063,543,412 shares (99.8770%) voted in favor, while 1,117,500 shares (0.1049%) opposed, and 192,500 shares (0.0181%) abstained [23]. Legal Opinions - The legal opinion provided by King & Wood Mallesons confirmed that the meeting's procedures complied with relevant laws and regulations, and the voting results were valid [24]. Documents for Reference - The company will keep records of the meeting resolutions, legal opinions, and other documents as required by the Shenzhen Stock Exchange [25].

Group 1: Core Insights - The article highlights a significant increase in short-term loans from large banks, while credit growth in small and medium-sized banks is slowing down [1][4]. - The article discusses the impact of the Spring Festival on deposit fluctuations, noting a year-on-year increase of 3.5 trillion yuan in unit deposits, with a notable shift of personal deposits from small to large banks [2][4]. - The investment strategy for the banking sector in 2026 focuses on identifying targets with potential for growth, banks with convertible bond expectations, and maintaining a dividend strategy [5]. Group 2: Liability Side - Unit deposits saw a year-on-year increase of 3.5 trillion yuan, with demand for current deposits rising by 2.5 trillion yuan and a decrease in time deposits by 912 billion yuan, attributed to the Spring Festival's timing [2]. - Personal deposits experienced a year-on-year increase of only 3.3 trillion yuan, with current and time savings deposits decreasing by 1.9 trillion yuan and 398.7 billion yuan respectively, indicating a migration trend from small to large banks [2]. - Non-bank deposits increased by 2.9 trillion yuan, with large banks contributing 2.2 trillion yuan and small banks 646.1 billion yuan, driven by a low base effect from regulatory changes [2]. Group 3: Asset Side - Total loans decreased by 489.3 billion yuan year-on-year, with large banks and small banks seeing reductions of 213 billion yuan and 276.3 billion yuan respectively, reflecting subdued credit demand and increased pressure on small banks [4]. - Short-term loans saw a significant increase of 347.8 billion yuan, with large banks experiencing a rise of 419.7 billion yuan, driven by both corporate and consumer short-term loans [4]. - Bond investments increased by 205.7 billion yuan year-on-year, with large banks increasing by 376 billion yuan and small banks decreasing by 170.3 billion yuan [4][5].

Group 1 - The company held its fifth board meeting on February 11, 2026, with all 11 directors participating and voting [2][4] - The board approved a general authorization for domestic debt financing instruments, which will be submitted to the shareholders' meeting for approval [3][4] - The company plans to manage the issuance of debt financing instruments with a repayment balance not exceeding 20 billion yuan [5] Group 2 - The types of debt financing instruments include financial bonds, corporate bonds, subordinated bonds, short-term corporate bonds, and asset-backed securities [6] - The maturity of the debt financing instruments will not exceed 10 years, with specific terms determined based on market conditions [8] - The funds raised will be used for business operations, debt repayment, and capital structure adjustments [12] Group 3 - The board approved revisions to the performance assessment management measures for the management team [19][20] - The board also approved revisions to compliance management and anti-money laundering policies [23][24] - The board determined the risk appetite and tolerance for compliance management and anti-money laundering for 2026 [25][26] Group 4 - The company will hold its first extraordinary shareholders' meeting on February 27, 2026, to discuss the approved proposals [38][39] - The meeting will be conducted through a combination of on-site voting and online voting [46] - The registration date for shareholders to attend the meeting is February 24, 2026 [47]

Report Industry Investment Rating - Not provided in the content Core Viewpoints of the Report - Due to the introduction of VAT on new bonds, the calculated credit spreads are passively narrowed, making them incomparable with historical data. Two methods are presented to remove the impact of VAT and restore the real spread levels [2][11] - After adjusting for VAT, high - grade, medium - and short - term credit bonds' credit spreads relative to the same - maturity government bonds are at historically low levels, and profit - seeking should moderately shift to medium - and long - term bonds [33] Summary According to the Table of Contents I. Credit Spread Calibration Techniques 1. Tax Burden Compensation Back - Calculation Method - When VAT is introduced, investors require "tax burden compensation" in new bond issuance pricing to ensure after - tax real yields are not lower than old bonds. The ratio of pre - tax yields that makes the after - tax yields of new and old bonds equal is defined as the "coupon compensation multiple" [2][12] - For new bonds issued after August 8, 2025, banks' self - operation applies a 6% VAT rate, and asset management institutions and public funds apply a 3% VAT rate. After considering urban construction and education surcharges, the actual VAT rates are 6.34% and 3.26% respectively. The "coupon compensation multiple" for banks is about 1.07, and for asset management institutions and public funds, it is about 1.03 [13] - If the current secondary - market valuation yield curve fully reflects investors' tax burden compensation requirements, dividing the current valuation by the coupon compensation multiple can obtain the original valuation yield curve without the impact of VAT. For example, on January 23, the equivalent coupon compensation for 1 - 10 - year government bonds and policy - bank bonds with 6% and 3% interest VAT was calculated [18] - By dividing the ChinaBond valuation yield curve by the coupon compensation multiple, the credit spreads after removing the impact of VAT can be restored. As of January 23, the medium - duration general - credit bonds still have some room for decline compared with government bond yields [24] - Different types of bond investors have different tax - rate preferences and interest compensation requirements. Government bonds are mainly held by banks' self - operation with higher actual tax rates and higher after - tax interest compensation requirements, while policy - bank bonds and financial bonds are mainly invested by institutions with a 3% tax rate and lower interest compensation requirements [25] - After calibration, the credit spreads of high - grade, medium - and short - term credit bonds relative to the same - maturity government bonds are at historically low levels, and profit - seeking should shift to medium - and long - term bonds [33] - The tax compensation back - calculation method provides a theoretical framework, but in practice, it is difficult to verify whether "full compensation" has been achieved, and the compensation amount is affected by multiple factors and is dynamic [39] 2. New - Old Bond Spread Restoration Method - In the short term, by observing the yield difference between new and old bonds issued by the same entity with very close remaining maturities, the dynamic change of the market's pricing of VAT compensation can be more timely reflected [4] - For general non - financial credit bonds, the credit spread after removing the impact of VAT is equal to the credit spread calculated based on the ChinaBond yield curve plus the new - old bond spread of the same - maturity government bonds/policy - bank bonds. For Tier 2 and perpetual bonds, it is equal to the credit spread calculated based on the ChinaBond yield curve plus the new - old bond spread of the same - maturity government bonds/policy - bank bonds minus the new - old bond spread of the same - maturity financial bonds [4] - As of January 23, the adjusted spreads of 1 - 5 - year high - grade general - credit bonds and government bonds have shrunk to below the 15th percentile since 2024, while the spreads of 7 - year and above bonds are at a relatively higher historical percentile, with more sufficient risk compensation for extending the maturity [47] - The new - old bond spread restoration method has limitations. The observed spread may underestimate the real tax compensation requirement, and it is difficult to restore the spreads of some bonds due to the scarcity of comparable bond samples. This method is more suitable for capturing short - term trading opportunities and monitoring market sentiment [4][48]

Investment Rating - The overall investment outlook for the banking industry is stable, with no significant changes expected in credit quality over the next 12 to 18 months [54]. Core Insights - The banking industry is expected to maintain a steady development trend in 2026, supported by effective policy measures that will enhance the stability of the banking sector [5][7]. - The industry will continue to experience strong regulation, focusing on risk prevention and high-quality development, with banks optimizing their operational strategies [7][8]. - The asset scale of banks is projected to grow steadily, with improvements in deposit costs and a narrowing of loan interest rate declines [25][26]. - The profitability of banks has been slightly pressured since 2025, but overall asset quality remains good, with liquidity indicators showing a high safety margin [28][31]. Industry Fundamentals Analysis - The banking industry is expected to continue under a "strong regulation" framework, guiding banks towards high-quality development and maintaining overall credit risk at controllable levels [8]. - Regulatory policies will focus on supporting the resolution of real estate and local government debt risks, which will positively impact the banking sector's credit [9][13]. - The banking sector's asset growth has rebounded due to a moderately loose monetary policy and increased funding directed towards national strategic areas [15]. Credit Performance of Industry Enterprises - Since 2025, the banking industry's profitability has faced slight pressure, with net interest margins declining but at a reduced rate [31]. - The overall credit situation in the banking sector remains stable, with a few banks experiencing downgrades due to deteriorating asset quality and weak profitability [52]. - The integration of small and medium-sized banks is accelerating, which is expected to reduce the number of banking institutions and alleviate credit risk pressures [29][53]. Conclusion - The banking industry is anticipated to continue its high-quality development trajectory in 2026, supported by favorable fiscal and monetary policies [54]. - The financial performance of banks is expected to remain stable, although net interest margins will likely stay at the lower end of the range, with some regional banks facing asset quality pressures [54].

Core Viewpoint - The Ministry of Finance and the State Taxation Administration of China have announced the extension of tax exemption policies for interest income from bonds held by foreign institutional investors in the domestic bond market, effective from January 1, 2026, to December 31, 2027 [3][4]. Group 1: Tax Policies - From January 1, 2026, to December 31, 2027, interest income from bonds held by foreign institutional investors in the domestic bond market will be exempt from corporate income tax and value-added tax [3]. - From August 8, 2025, to December 31, 2027, interest income from foreign-issued government bonds and local government bonds will be exempt from value-added tax for foreign institutional investors [3]. - The previous announcement indicated that from August 8, 2025, value-added tax would be reinstated on interest income from newly issued government bonds, local government bonds, and financial bonds, but the new policy provides an exemption for foreign investors [3]. Group 2: Market Impact - The ongoing tax exemption policies are expected to lower the holding costs for foreign institutional investors, thereby increasing their returns and attracting more investment into China's bond market [4]. - The increasing participation of foreign investors in China's financial market is seen as a significant factor in promoting the opening up of the bond market and the internationalization of the Renminbi [4].

Group 1 - The Ministry of Finance and the State Taxation Administration announced the extension of tax exemption policies for foreign institutions investing in the domestic bond market, effective from January 1, 2026, to December 31, 2027, exempting corporate income tax and value-added tax on bond interest income [1] - From August 8, 2025, to December 31, 2027, foreign institutions will be exempt from value-added tax on interest income from government bonds and local government bonds issued abroad [1] - The previous announcement indicated that from August 8, 2025, value-added tax will be reinstated on interest income from newly issued government bonds, local government bonds, and financial bonds, but the new policy provides an exemption for foreign institutions [1] Group 2 - The recent tax exemption policies are part of China's efforts to accelerate the opening of its financial markets, with foreign investors increasingly participating and contributing to the internationalization of the Renminbi [2] - The exemption will lower the holding costs for foreign institutional investors and enhance their returns, thereby attracting more investment into China's bond market and further promoting its openness [2]

Group 1: Bond Market Overview - In November 2025, the bond market issued a total of 70,179.3 billion yuan across various types of bonds, including government bonds (10,444.2 billion yuan), local government bonds (9,126.9 billion yuan), financial bonds (11,955.0 billion yuan), corporate credit bonds (13,948.8 billion yuan), credit asset-backed securities (327.2 billion yuan), and interbank certificates of deposit (24,009.2 billion yuan) [1] - As of the end of November 2025, the bond market's custody balance reached 196.3 trillion yuan, with the interbank market holding 173.0 trillion yuan and the exchange market holding 23.2 trillion yuan [1] Group 2: Trading Activity - In November 2025, the interbank bond market recorded a transaction volume of 30.5 trillion yuan, with an average daily transaction of 1.5 trillion yuan, reflecting a year-on-year increase of 7.6% and a month-on-month increase of 3.2% [2] - The exchange bond market had a transaction volume of 3.8 trillion yuan, with an average daily transaction of 188.7 billion yuan [2] - The commercial bank counter bond transactions totaled 860.4 billion yuan across 8.1 million transactions [2] Group 3: Foreign Participation - As of the end of November 2025, foreign institutions held a custody balance of 3.6 trillion yuan in the Chinese bond market, accounting for 1.9% of the total custody balance [2] - Among foreign holdings, 2.0 trillion yuan (56.2%) were in government bonds, 0.7 trillion yuan (19.1%) in interbank certificates of deposit, and 0.8 trillion yuan (21.1%) in policy bank bonds [2] Group 4: Money Market Conditions - In November 2025, the interbank lending market recorded a transaction volume of 7.4 trillion yuan, a year-on-year decrease of 17.3% but a month-on-month increase of 9.6% [2] - The bond repurchase transactions totaled 149.8 trillion yuan, showing a year-on-year decrease of 6.8% but a month-on-month increase of 13.9% [2] Group 5: Interest Rates and Commercial Paper - The weighted average interest rate for interbank lending was 1.42%, up by 2.5 basis points month-on-month, while the weighted average interest rate for pledged repos was 1.44%, up by 3.2 basis points [3] - In November 2025, the commercial bill acceptance amount was 4.0 trillion yuan, and the discount amount was 3.1 trillion yuan [3] - As of the end of November 2025, the acceptance balance of commercial bills was 20.9 trillion yuan, and the discount balance was 16.2 trillion yuan [3] Group 6: Stock Market Performance - By the end of November 2025, the Shanghai Composite Index closed at 3,888.6 points, a decrease of 66.2 points or 1.7% month-on-month, while the Shenzhen Component Index closed at 12,984.1 points, down 394.1 points or 2.9% [3] - The average daily trading volume in the Shanghai market was 808.5 billion yuan, down 16.0% month-on-month, while the Shenzhen market's average daily trading volume was 1,089.8 billion yuan, down 7.9% month-on-month [3] Group 7: Holder Structure in Interbank Bond Market - As of the end of November 2025, there were 3,987 institutional members in the interbank bond market, all of which were financial institutions [4] - The top 50 investors in corporate credit bonds held 53.4% of the total bonds, primarily concentrated among state-owned commercial banks, public funds, and insurance financial institutions [4] - The top 200 investors accounted for 84.6% of the holdings, indicating a high concentration of ownership [4]

Group 1: Bond Market Overview - In November, the total issuance of various bonds in the bond market reached 70,179.3 billion yuan, with government bonds at 10,444.2 billion yuan, local government bonds at 9,126.9 billion yuan, financial bonds at 11,955.0 billion yuan, corporate credit bonds at 13,948.8 billion yuan, credit asset-backed securities at 327.2 billion yuan, and interbank certificates of deposit at 24,009.2 billion yuan [1] - By the end of November, the bond market's custody balance was 196.3 trillion yuan, indicating a robust market size [1] - The interbank bond market saw a total transaction volume of 30.5 trillion yuan in November, with an average daily transaction of 1.5 trillion yuan, reflecting a year-on-year increase of 7.6% and a month-on-month increase of 3.2% [1] Group 2: Foreign Participation and Market Trends - As of the end of November, the custody balance of foreign institutions in the Chinese bond market was 3.6 trillion yuan, accounting for 1.9% of the total custody balance [1] - In the interbank money market, the total transaction volume in November was 74 trillion yuan, showing a year-on-year decrease of 17.3% but a month-on-month increase of 9.6% [2] - The weighted average interest rate for interbank lending in November was 1.42%, reflecting a month-on-month increase of 2.5 basis points, while the weighted average interest rate for pledged repos was 1.44%, with a month-on-month increase of 3.2 basis points [2]