The Zhitong Finance App learned that Zhongtai Securities released a research report saying that 1H26 banking revenue was +7.2% year-on-year and net profit was +3% year-on-year, all of which were basically consistent with Q1. Stable marginal performance was mainly driven by stable interest spreads. The overall quality of assets is stable, optimized for the public sector, retail sales are still in the disclosure cycle, confirmation is strict, and disposal is being accelerated. The dividends have been raised again, and the bonus attributes are highlighted. The medium- to long-term ROE of banks is relatively certain. Dividends are stable and dividends are considerable. The certainty of earning ROE and dividends is high. Short-term and technological seesaw effects, and medium- to long-term pricing returns to ROE and dividends. In terms of individual stocks, the focus is on recommending major banks with capital cost advantages and high-quality regional urban agricultural commercial banks.
The main views of Zhongtai Securities are as follows:
revenue
1H26 revenue was +7.2% YoY (VS 1Q26 revenue +7.3% YoY). The absolute contribution is still large-scale. The core factor driving the margins to maintain a high increase is stabilizing interest spreads. Looking at the sector, major banks, stock banks, urban commercial banks, and agricultural commercial banks were +9.2%, +2.6%, +8.1%, and +2.0%, respectively. The revenue growth rate of major banks and urban commercial banks is high. Once interest spreads stabilize, the scale growth rate will directly determine the growth rate of core interest income. Major banks and urban commercial banks have the most resilient interest spreads, the most stable rate of expansion, and the strongest contribution to marginal revenue. Looking at the marginal growth rate, the growth rate of major banks increased marginally, while other margins narrowed slightly.
profit
The cumulative net profit of 1H26 listed banks was +3.0% year-on-year (same as 1Q26). Costs and provision contributions increased marginally, and taxes were hampered. Looking at the sector, major banks, stock banks, urban commercial banks, and agricultural commercial banks were +4.4%, -2.6%, +7.3%, and +3.8%, respectively. The margins of profit growth of major banks continued to rise, urban commercial banks remained high, stock banks widened marginally due to the influence of individual stocks, and agricultural and commercial banks remained stable. Most of the individual stocks with profit growth of 10% or more have advantageous locations: Qingdao (18.1%), Qilu (16.1%), Ningbo (12.1%), Chongqing (10.3%), and Changshu (10.6%).
Detailed analysis of interest income
The industry's 1H26 net interest income was +8.4% year over year, continuing to increase 1.2 percentage points over 1Q26 (+7.2%). 1. YoY: The year-on-year decline in interest spreads maintained a narrowing trend: 1h26 cumulative annualized net interest spreads fell 1 bps year on year (vs1q26 fell 3 bps year on year, 2025 fell 12 bps year on year) to 1.38%, and the year-on-year decline continued to narrow. Among them, the decline in yield on interest-bearing assets narrowed by 3 bps, and the decline in the cost ratio of interest-bearing debt remained flat. 2. Month-on-month: Listed banks' 2Q26 annualized net interest spreads were 1.38%, flat month-on-month; among them, asset-side returns and debt-side interest rates declined by 6 bp and 7 bps, respectively, and the decline was basically the same as 1Q26.
Growth in scale
Industry growth is dominated by corporate credit (over 90%), and retail demand is still weak. Investment in the public sector is supported by political credit+ entities. Looking at the net increase in 1H26 credit compared to the beginning of the year, retail sales were 92.5%, and retail sales were -1.8%. Among them, Pan-Government Credit, Manufacturing, and Zero were 49.6%, 25.2%, and 9.9% respectively. Sectors with a relatively high level of prosperity, such as manufacturing, infrastructure, and state-owned enterprises, which correspond to high-growth sectors are high-quality regional urban commercial banks+major banks. The advantages of regional beta advantages, comprehensive service advantages, and proximity to customers are even more remarkable.
Detailed breakdown of non-interest income
The growth rate of processing fees and other non-interest rates has slowed slightly. The overall non-interest revenue of the 1H26 industry was +4.2% YoY (VS 1Q26 +7.6% YoY), down 3.4 percentage points from month to month under the influence of a high base. (1) Fee revenue was +1.1% year-on-year, and the growth rate was 4.7 percentage points slower than in 1Q26. (2) Other non-interest income was +7.5% YoY, down 2.7 percentage points from 1Q26.
Asset quality disaggregation analysis
Overall stability and structural differentiation intensified. The rise in bad generation in the second quarter stemmed from stricter confirmation. 1. Overall dimensions: The industry's 1H26 annualized bad generation rate was 0.81%, +10bp month-on-month, +6bp; estimated from cumulative data, 2Q26 was about 0.92% in a single quarter, +20bp month-on-month, and +5bp year-on-year, of which stock banks were 1.64% per quarter and +66 bps month-on-month, which was the main source of industry fluctuations; the month-on-month increase in the second quarter was seasonal as confirmed at the time of mid-report. The rise in bad generation in the second quarter mainly confirmed stricter rather than actual deterioration: strict classification of credit card negotiation installment customers (CMB credit card generation +3.9 billion yuan year on year), downsizing of concern categories after the transition period of the new classification regulations ended (Shanghai and Everbright “downgraded”, Guiyang “included bad according to prudential principles”), and the retail denominator shrank. The 1H26 industry had a negative rate of 1.22%, flat month-on-month; the share of concern categories was 1.71%, compared to 2025 +1bp; the overdue rate was 1.50%, compared to 2025 +7bp; provision coverage rate was 233.09%, -0.27pct month-on-month, and the bank was +1.06pct month-on-month; credit costs 0.84%, +7bps year over year, asset impairment loss +17.8% vs. net profit +3.0% year over year, to make up for the apology. 2. Looking at the non-performing rate by industry: The non-performing rate for public loans was -7 bp to 1.14% at the end of 2025; the non-performing rate for retail loans was +16 bp to 1.52% at the end of 2025 (retail non-performing balance was +11.5% compared to the beginning of the year); mortgages, credit cards, consumer loans, and operating loans were +11bp, +27bp, +22bp, and +8bp, respectively. Credit cards put pressure on centralized confirmation. The bad generation rate is expected to remain in the 0.75% to 0.85% range in the second half of the year. High retail risk will subside, public relations will continue to be steady, and the disturbance of asset quality on profits is manageable.
others
1. Dividends: At present, 20 listed banks have disclosed their 26-year mid-term dividend plans. Of these, 13 listed banks have increased their dividend ratio over the same period last year. 2. Debt conversion: Currently, the listed banks have 4 convertible bonds. Among them, the Bank of Chongqing is the closest to ransom, with a space of 8.86%, Changshu and Shanghai with 10.98% and 16.72% respectively, and Industrial Bank's space of 50.14%. 3. Capital: 1h26 industry core tier 1 capital adequacy ratio was -3 bp to 11.35% month-on-month (VS1q26 -21 bp to 11.38% month-on-month). 4. Taxation: The overall increase in income tax rates was year-on-year. Factors affecting income tax rates include: 1) the year-on-year decrease in tax-free income, such as fund dividends and interest income from treasury bonds, and a decrease in the share; 2) as described above, the overall scale of write-off of the industry increased year on year, and deferred income tax assets formed from prior calculation provisions were gradually transferred back, and tax reduction amounts were consumed; 3) changes in the fair value of financial investments had an impact on deferred income tax.
Investment advice
1. Deterministic bank performance for the whole year will bring steady returns for bank stocks in 2026. The short term is related to the market style; 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, and the revenue growth rate will continue to be a highlight, and performance certainty is strong. 2. Bank stocks have two main investment lines: the first is an urban agricultural commercial bank with regional advantages and strong certainty. The regions include Jiangsu, Shanghai, Chengyu, Shandong, and Fujian (see the bank's series of in-depth regional economic studies). The focus is on recommending the Bank of Jiangsu, Qilu Bank, Yunong Commercial Bank, Bank of Hangzhou, Bank of Shanghai, Nanjing, Chengdu, Shanghai, Shanghai-agricultural and other regional banks. Second, the logic of high dividends is prudent. The focus is on recommending large banks: the six major banks (such as Agricultural Bank, CCB, and ICBC); as well as stock banks such as CMB, Societe Generale, and CITIC.
Risk warning: The economic downturn exceeded expectations; financial supervision exceeded expectations; research information was not updated in a timely manner.