The banking sector is strong, as of the deadline, $CM BANK (03968.HK)$ rose by 4.36%, to HK$32.3; $BANKCOMM (03328.HK)$ rose by 3.27%, to HK$5.690; $ICBC (01398.HK)$ rose by 2.48%, to HK$4.55; $PSBC (01658.HK)$ Rising by 2.31%, closing at 4.42 Hong Kong dollars.

On the news front, the State Council Information Office held a press conference this morning, with the heads of the People's Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission introducing the situation regarding financial support for high-quality economic development. Several heavyweight policies were introduced simultaneously, increasing the intensity of monetary policy regulation to further support stable economic growth.

At the press conference, the People's Bank of China announced that it would reduce the reserve requirement ratio by 0.5 percentage points in the near future, providing approximately 1 trillion yuan of long-term liquidity to the financial market.

In terms of mortgage loans, the People's Bank of China announced that it will lower the interest rates for existing housing loans and unify the minimum down payment ratio for mortgages, guiding commercial banks to lower the interest rates for existing housing loans to around the level of new mortgage rates, with an expected average reduction of about 0.5 percentage points.

Regarding the adjustment of mortgage rates, People's Bank of China Governor Pan Gongsheng stated at the meeting that banks need time for technical preparation, and will subsequently improve the commercial banks' mortgage loan mechanisms. Based on market principles, both banks and customers will autonomously negotiate for dynamic adjustments.

In response to this, Zhang Dawei, Chief Analyst at Zhongyuan Real Estate, stated that the current average interest rate for existing housing loans is about 3.92%. With this 50 basis points reduction, calculated based on a commercial loan amount of 1 million yuan, a 30-year repayment period, the monthly payment is expected to decrease by approximately 280 yuan and it could reduce total interest expenses by 0.1 million yuan over 30 years.

In addition, Li Yunze, director of the China Banking and Insurance Regulatory Commission, said at the meeting that large commercial banks are the main force of our country's financial system serving the real economy. The main regulatory indicators of large commercial banks are in a healthy range. In recent years, they have mainly relied on retaining profits to increase capital. However, as banks increase their willingness to sacrifice profits, profit growth has slowed down. This will enhance the core Tier 1 capital of the six large commercial banks. The implementation will be carried out in an organized manner in stages and in batches, continuously urging large commercial banks to improve their level of refined management, and strengthen their high-quality development capabilities under capital constraints.

Institutions believe that bank stocks will continue to benefit from the stable high dividend logic in the fourth quarter.

Some institutions pointed out that the unexpected interest rate cut by the Federal Reserve last week has expanded the room for interest rate cuts domestically. Although the impact of peripheral interest rate cuts and foreign capital inflows on A-shares is still limited, the stable high dividend logic of the bank sector in the fourth quarter still dominates. It is expected that the bank sector will achieve dual support of asset structure optimization and high dividends, thus maintaining a "recommended" rating for this industry.

Meanwhile, Dahua Securities also expressed a similar view, believing that bank valuations are undervalued, and the rebound in dividend yield may bring new opportunities for defensive stocks. More policy support provided by regulatory institutions, such as lowering deposit rates and reserve requirement ratios, will help alleviate investors' concerns about the domestic banking fundamentals.

Editor/Rocky