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Cailianshe News, July 23 (Reporter Shi Sitong)Unlike yesterday's collective sell-off, in today's early trading, all 42 bank stocks were in the green, which was in sharp contrast.

Cailianshe reporters noted that after the opening on July 23, bank stocks as a whole fluctuated and strengthened, among which Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and many other bank stocks hit new historical highs. In the afternoon, the banking sector index fell back from its highs. By the close of trading, the banking sector's increase dropped to 0.68%, ranking third.

In the view of industry insiders, this round of general rise in the banking sector may be related to the signal released by state-owned banks to reduce the deposit interest rate. With the further reduction of 1-year and 5-year LPR by 10 basis points, banks' reasonable follow-up adjustment of deposit interest rates will help stabilize the interest rate spread, and the benefits of subsequent deposit interest rate cuts are expected to be gradually released.

In addition, the performance of listed banks has also become one of the driving factors for the rise of the sector. The three banks that have disclosed their performance reports, including Ruifeng Bank, Suning Bank and Qilu Bank, have achieved double growth in revenue and net profit in the first half of the year, and on this basis, achieved double-digit net profit growth.

A new round of deposit rate cuts is imminent, and the pressure on net interest margin may be alleviated

Specifically, on July 23, Qilu Bank led the rise in bank stocks, with the highest intraday increase reaching 6.03%. As of the close, Qilu Bank reported 4.66 yuan per share, an increase of 4.02%.

Meanwhile, Industrial and Commercial Bank of China followed closely behind, with a daily increase of 2.91%; Bank of China, Agricultural Bank of China, Chongqing Rural Commercial Bank, China Construction Bank and other banks followed suit, with increases of more than 2%. Among them, the share prices of ICBC, ABC, BOC and many other banks hit new historical highs.

In this regard, the industry generally believes that this round of general increase may be related to the signal released by state-owned banks to lower the deposit listing interest rate. It is understood that shortly after the central bank announced a 10 basis point reduction in the 1-year and 5-year LPR yesterday, state-owned banks also announced that they were considering lowering the deposit listing interest rate.

"Against the backdrop of stabilizing bank net interest margins and market-oriented adjustments to deposit rates, bank deposit rates are expected to usher in a new round of cuts." In the view of Zhang Yu, chief analyst of the banking industry at Huafu Securities, with the issuance of new deposit products and the gradual expiration of some previous high-priced time deposit products, the positive impact of bank deposit interest rate cuts is expected to be gradually released.

Mingming, chief economist of CITIC Securities, told Cailianshe reporters that under the background of relatively rigid bank liability costs, the reduction in loan interest rates has objectively compressed the bank's interest margin space. Since 2022, the net interest margin has been declining, becoming an issue and major challenge that needs to be focused on in the current banking operations.

At the same time, he also pointed out that timely adjustment of deposit listing interest rates is also conducive to achieving effective linkage between deposit and loan interest rates and promoting the marketization of deposit interest rates. If the above interest rate adjustment is implemented, on the one hand, it can reduce the interest expenses of banks, increase the profit margin of banks, and help stabilize the net interest margin; on the other hand, lowering the deposit interest rate may stimulate more funds to flow into the investment market and increase the activity of the capital market.

Three listed banks achieved "double growth" performance, and the industry continues to be optimistic about the allocation value of the banking sector

In addition to the above-mentioned positive news, the recent performance of listed banks has also become one of the driving factors for the rise of the sector. From the disclosure situation, three A-share listed banks have disclosed their performance reports, and all three banks have achieved double growth in revenue and net profit in the first half of the year, and on this basis, achieved a double-digit increase in net profit.

Cailianshe reporters noticed that just last night, Qilu Bank just released its "double growth" performance report, and then the bank's stock price ushered in a sharp rise. Data showed that in the first half of the year, the bank achieved operating income of 6.412 billion yuan, a year-on-year increase of 5.53%; net profit attributable to shareholders of listed companies was 2.347 billion yuan, a year-on-year increase of 16.98%; basic earnings per share was 0.46 yuan.

In addition, in the first half of this year, Ruifeng Bank also achieved revenue of 2.174 billion yuan and net profit attributable to shareholders of 843 million yuan, an increase of 14.90% and 15.48% respectively; Suning Bank achieved revenue of 2.264 billion yuan and net profit attributable to shareholders of 1.121 billion yuan, an increase of 8.02% and 15.81% respectively.

Regarding the overall performance of listed banks, some analysts predict that the profits of listed banks will still face negative growth pressure in the first half of 2024, but the profit growth rate is expected to improve slightly month-on-month. At the same time, the high dividend trend of bank stocks is not the second half, but the beginning of a long cycle.

In fact, since the beginning of this year, the banking sector has maintained a strong upward trend as a whole, influenced by factors such as high-yield stock strategies, favorable real estate policies and market expectations. Looking ahead, Zhang Yu believes that the banking sector needs to test the effects of previous policies and future fundamental trends.

According to Lin Jinlu's analysis from Dongxing Securities' banking team, in the short term, considering that the interest rate cut cycle has not yet ended and the interest rate spread is still under pressure, the growth rate of credit scale is showing a slowing trend and the strength of provision feedback is weakening, it is expected that the growth rate of bank performance will not improve in the short term; but positive factors are also increasing, including the expected acceleration of the improvement of deposit costs and marginal improvement in asset quality expectations.

In the medium and long term, Lin Jinlu believes that the current interest rate trend is downward, the asset shortage pressure is expected to continue, and the value of high dividend asset allocation is outstanding. In the context of the expansion of passive funds and the guidance of medium and long-term funds into the market, the capital side has strong support and is optimistic about the allocation value of the sector.