Understanding the Market | Domestic bank stocks rise again as reserve requirement ratio cuts and interest rate reductions strengthen banks' high dividend advantages. The inflow of medium- to long-term funds into the market is expected to accelerate the realization of sector dividend value

According to the Zhitong Finance APP, the shares of domestic banks have risen again. As of the time of writing, Bank of Qingdao (03866) is up 3.52%, trading at HKD 4.12; CZBANK (02016) is up 2.99%, trading at HKD 2.76; Bank of China (03988) is up 1.96%, trading at HKD 4.69; Postal Savings Bank (01658) is up 1.82%, trading at HKD 5.04; China Construction Bank (00393) is up 1.78%, trading at HKD 6.88; and CITIC Bank (00998) is up 1.7%, trading at HKD 6.57.

Xiangcai Securities released a research report stating that the incremental financial policies, combined with relaxed fiscal policies, are accelerating implementation. It is expected that bank credit supply will strengthen, likely maintaining a relatively stable credit growth rate. The interest rate cut has not exceeded expectations, and the reduction in deposit rates will alleviate the pressure on bank interest margins. At the same time, asset quality will continue to consolidate under policy support, and the pressure on bank performance in the future is controllable. After this round of interest rate cuts, the stability of bank operations and the relative advantage of high dividends are expected to improve.

China Galaxy believes that a package of financial policies has been introduced, with reserve requirement ratio cuts and interest rate reductions implemented, and structural tools strengthened to guide the optimization of bank credit structure. Positive factors in the banking fundamentals continue to accumulate. The entry of medium- and long-term funds into the market is expected to accelerate further, speeding up the realization of the dividend value of the banking sector. CITIC Securities stated that from the perspective of the pricing of listed banks' assets and liabilities, since 2025, the banking industry's asset-liability configuration has stabilized in total volume, adjusted in structure, and actively increased in deposits and loans, while the expansion of interbank assets and liabilities has converged. In terms of interest margins, although the industry's net interest margin continues to decline, the savings in liability costs help to narrow the decline in interest margins. Looking ahead, the reduction of liability costs remains an important direction for bank interest margin management in the subsequent quarters