Zhongtai 2025 Bank Sector Investment Strategy: Continuation of High Dividend Strategy Focus on Quality Regional Banks and Joint-Stock Banks

According to the Zhitong Finance APP, Zhongtai Securities published a research report on the investment strategy for the banking sector in 2025. The report states that the economic inertia will continue in the first half of the year, and it is expected that high-dividend defensive stocks will still dominate; at the same time, considering the current market preference improvement and the divergent economic expectations for the future, the following three clues can be derived: ① high-dividend banks; ② city commercial banks with location advantages and strong certainty; ③ core assets. In the second half of the year, observe the effectiveness of policy implementation: ① if policy clues are clear and policy effects are evident, look for varieties that align with policy themes; ② if the economic recovery situation is still below expectations, return to high-dividend defensive stocks.

Policy Outlook: Focus on key areas such as debt reduction, real estate, consumption, and exports. ① Debt reduction: Local debt pressure has been partially alleviated. With the exit of non-standard financing and the reduction of city investment bond scale, the proportion of bank loans in the total debt of city investment platforms has increased, and government credit business is expected to remain the main source of incremental bank credit. ② Real estate: The relaxation of policies and market recovery will present a dynamic game process. It is expected that the supply side of the real estate market in the future will depend on the strength of state-owned enterprises' storage, while the demand side will depend on the recovery of residents' income expectations. ③ Consumption: The central government's leverage effect is significant, and next year the central government may continue to leverage to promote consumption, introducing more policies to stimulate domestic demand, including expanding the scale and scope of replacing old consumer goods with new ones. ④ Exports: With global inflation slowing next year, insufficient replenishment momentum in the U.S., and the impact of increased tariffs after Trump's election, it is expected that the pressure to stabilize foreign trade will be greater next year, with strong uncertainty in exports. ⑤ Overall economic expectations: The GDP growth rate is expected to be around 4.5%-5% next year.

Fundamental Outlook: Overall estimates for listed banks show a revenue decrease of 3.2% in 2025 and a net profit increase of 1.2%, benefiting from the driving force of high-quality regional city commercial banks, which remain the sector with the best performance growth. ① Volume: The growth rate of outstanding social financing in 2025 is expected to be around 8.1%, mainly driven by the increase in government bonds with certainty; credit growth is expected to decline to around 7.1%. ② Price: The estimated interest margin in 2025 is expected to decrease by 17 basis points year-on-year, with the policy impact on outstanding loans accounting for 13.9 basis points, plus a decrease of 25 basis points in the 5-year LPR at the beginning of the year and a 20 basis point decrease in fixed deposits affecting 3 basis points. The main pressure still comes from the first quarter, with subsequent declines gradually narrowing. ③ Fees: Low base + new momentum, fee growth is expected to stabilize in 2025. ④ Other non-interest: Growth is expected to decline but remain controllable. ⑤ Asset quality: Overall stable, with differentiation among subcategories.

Sector Market Review and Outlook. ① Insights from market review—rotation of core assets, location advantages, and high dividends. Since 2008, the banking sector has experienced four style switches: the shareholding bank era (2009-2015), the core asset era (2016-mid 2021), the location advantage era (mid 2021-end 2022), and the high dividend era (2023 to present). ② Future outlook: Based on historical reviews, how the subsequent market will unfold. The current environment can correspond to the end of 2012, the end of 2018, or the end of 2022, so the unfolding of the 2025 market can refer to 2013, 2019, or 2023. ③ Conclusion: High dividend strategy in the first half of the year, focus on policy in the second half Risk Warning: Economic downturn exceeds expectations; risk of refinancing diluting dividend yield; risk of deviation in industry data estimation; risk of deviation from actual conditions due to insufficient sample statistics; risk that publicly available information used in the research report may be outdated or not updated in a timely manner