中国金融行业 - 调研支持中国金融板块估值重估趋势延续-China Financials-Trip supports firm trend of more valuation re-ratings for China financials

Summary of Conference Call on China Financials Industry Overview - The conference call focused on the China financials sector, including banks, insurance firms, and non-performing loan asset management companies (NPL AMCs) [1][3]. Key Points and Arguments 1. Revenue and Profit Growth Expectations - Financial firms anticipate a rebound in revenue and profit growth in 2026, driven by stable credit costs and a potential recovery in net interest margins (NIM) [1][3]. - The expectation is supported by stable rates and a stabilizing NIM, with most banks indicating that new loan yields have stabilized due to rational competition and reduced window guidance [1][7]. 2. Loan Yield and NIM Trends - Most banks believe that loan yields have likely bottomed, paving the way for stabilizing or rebounding NIM in 2026 [7][10]. - ICBC expects a modest decline in NIM by approximately 2 basis points in Q4 2025, with a year-over-year decline of less than 10 basis points in FY26 [10]. 3. Credit Quality and NPL Management - Credit quality pressures are deemed manageable, with retail and property NPL pressures persisting but not accelerating [2][10]. - Banks have been digesting around Rmb4 trillion in NPLs annually through various means, including write-offs and sales [2][13]. - The recovery of property NPLs is maturing, and new risks are being well controlled [2][3]. 4. Positive Outlook for Investment - The outlook for China financials is considered attractive, with expectations of strong double-digit growth in household financial assets [3][5]. - Potential fiscal support for mortgage interest payments in 2026 is expected to mitigate property-related credit risks [3][20]. 5. Specific Bank Strategies - Minsheng Bank has set KPIs to lift loan yield by 2 basis points per quarter and is focusing on deposit cost control to support NIM [1][11]. - ICBC is adjusting its bond trading strategy to shorten duration in anticipation of a rebound in bond yields [10]. 6. NPL Formation and Recovery - Mortgage NPL formation remains stable, with ICBC reporting that its mortgage loan-to-value (LTV) ratio is below 42% overall [14][20]. - Cinda reported that banks are expected to continue large-scale NPL disposals, with corporate NPLs projected to be around Rmb400-500 billion and retail NPLs over Rmb150 billion [13][16]. 7. Regulatory Environment - Strict constraints on local government financing remain, with no new policies introduced this year, but existing measures are firmly in place [17][18]. Additional Important Insights - The conference highlighted the importance of self-disciplinary measures in improving the competitive environment for loan pricing [11]. - The potential for foreclosure and auction of property collateral is linked to defaulted inclusive loans rather than mortgages, indicating a shift in risk management strategies [16][20]. This summary encapsulates the key insights and trends discussed during the conference call regarding the China financials sector, emphasizing the expectations for recovery and growth amidst ongoing challenges.