The Zhitong Finance App learned that Zhongtai Securities released a research report saying that the bank's definitive performance for the whole year will bring steady returns for bank stocks in 2026, which is related to market style in the short term; the economic development model will continue (strong policy strength), strong public business and residents' continued low risk appetite will drive interest spreads to bottom up, revenue growth will continue to be a highlight, and performance certainty is strong. Bank stocks have two main investment lines: the first is an urban agricultural commercial bank with regional advantages and strong certainty. Regions include Jiangsu, Shanghai, Chengyu, Shandong, and Fujian. Second, the logic of high dividends is steady, and the focus is on recommending large banks.
The main views of Zhongtai Securities are as follows:
The fundamentals of performance
The performance is steady and resilient. It is both a procyclical variety and a weak cyclical variety. Excluding the high gold growth era from 2009 to 2013, the overall net profit growth rate of the industry has stabilized in a positive growth range of about 0-10% in the long economic cycle from 2014 to now. The bottom line comes from triple support: first, full coverage of the customer base under the indirect financing system, “the East is not bright, the West is bright”, and the scale growth is resilient; second, interest rate spread business is pro-cyclical, non-interest-bearing business countercyclical, and bond investment income increases during the period when interest rates decline to hedge against declining interest spreads and steady revenue; third, there is plenty of provision, industry reserves of about 5.3 trillion yuan. The net profit of the industry is about 2.2 trillion yuan, corresponding to the industry's net profit of about 2.2 trillion yuan. Mid-term estimates: Without reliance on provisions and releases, both revenue and profit can maintain positive growth, and the three-year ROE is above 8%.
The fundamentals of dividends
The dividends are stable and the dividends are considerable. Claims to increase dividends come from shareholders. Financial regulation requires profits to retain supplementary capital due to financial stability. Under multi-party games, banks prefer to maintain a stable dividend ratio, and the long-term dividend ratio has always been above 28%. In terms of dividend rate, high-quality regional urban and agricultural commercial banks and some stock banks have dividend rates of 5-6% (Societe Generale, CMB, Ping An, Shanghai, Chengdu, Shanghai, Chengdu, Shanghai, agricultural, Chongqing, Jiangsu, Nanjing, etc.), and the yield of major state-owned banks is around 4%, which is still higher than the yield of ten-year treasury bonds of about 230BP.
Investment side
The relatively bearish variety in the lackluster market, and the bank alpha variety in the bullish market did not lose the general trend. During the three rounds of market declines in 2015-2016, 2018-2019, and 2021-2024, banks all carried the decline relatively (the decline was significantly less than that of Shanghai and Shenzhen 300). Among them, the individual stocks that carried the decline were still high-quality banks supported by performance. Although the overall sector did not outperform the market during the bull market, there are alpha varieties within the sector that can outperform the market and significantly exceed the market. In terms of capital chips, the reduction in securities holdings has come to an end, the size of broad-based index funds has dropped to the level before the 2024 bailout, and financial disturbances from state-owned institutions have basically been eliminated; there is a seesaw effect in the short term and technology, and long-term pricing still revolves around ROE and dividends.
At the individual stock level
Follow the main line of performance certainty to find targets. Net interest spreads and asset quality beta attributes are strong. Currently, sector alpha endowments are mainly expanding on a large scale: major banks have natural capital cost advantages, and high-quality regional urban and agricultural commercial banks enjoy regional alpha. The focus is on recommending major banks (industry and commerce, agriculture, China, construction) +high-quality regional commercial banks (recently, the most cost-effective ones include Jiangsu, Nanjing, Qilu, etc.).
Risk warning: The economic downturn exceeded expectations, data updates were not timely, estimates were biased, etc.