Gelonghui, January 26 | China Merchants Securities issued a report stating that in December of last year, the mainland added a total of 1.94 trillion yuan in social financing, which is slightly lower than market expectations. An additional RMB 1.17 trillion in loans was added, a year-on-year reduction of RMB 240.1 billion. Overall demand for loans remains slightly weak. The bank believes that the mainland's monthly loan data remains flat, indicating that adjustment policies still need to be strengthened to support the economy. Therefore, although the loan market quoted interest rate (LPR) remained unchanged in January, the People's Bank of China announced a 0.5 percentage point reduction in the deposit reserve ratio on February 5. This is consistent with the bank's previous view that the deposit reserve ratio may be further lowered. The bank's tests showed that lowering the reserve ratio by 0.5 percentage points may have a small positive impact on banks' net interest spreads and increase banks' profits by about 1%; there is still a possibility that the LPR/Medium-Term Lending Facility (MLF) will be lowered in the future, which may put pressure on banks' net interest spreads. Furthermore, the bank indicates that the current average predicted price-earnings ratio of major domestic banks this year is about 3.3 times, and the predicted net price-earnings ratio is about 0.34 times, and the valuation is not high. Leading banks are now at the lower end of their respective net market ratio valuation ranges. In the long run, investors may be attracted to the industry's undervaluation and potentially stable asset quality. Maintaining the industry's “recommended” rating, giving Postbank an “plus” rating and target price of HK$5.85, believing that its overall asset quality is good; it also gives ICBC an “increase” rating and target price of HK$4.8. The company is a leader in the industry, has a high dividend ratio, and stable performance.