According to the CITIC Construction Investment Research Report, the February LPR cut was in line with expectations, and the 5-year reduction exceeded market expectations. The “1 year no motion+5-year reduction” policy combination is, on the one hand, conducive to stimulating improvements on the demand side of real estate and underpinning the macroeconomy; on the other hand, it reflects the policy attitude of caring for bank interest spreads. The negative sentiment in the market has been greatly dispelled, favoring bank valuations and embracing the targets of high-performing banks. Since most mortgages were repriced in January, considering the hedging effect of lower deposit interest rates at the end of 2023, the current 5-year LPR cut of 25 bps had little impact on banks' net interest spreads for 24 years. It is expected that the narrowing of net interest spreads in the banking sector in 2024 will still be better than last year.