Recently, many A-share listed banks have published their third quarter reports for this year. According to incomplete statistics, in the third quarter alone, the net income of Bank of Jiangsu (600919.SH) and Bank of Ningbo (002142.SZ) increased by more than 10% year-on-year. In addition, as of the time of writing, looking at the listed banks that have already released their third quarter reports this year, Jiangsu Changshu Rural Commercial Bank, Bank of Qingdao, and Bank of Hangzhou have achieved double-digit growth in net income for the first three quarters of this year.

In the third quarter, multiple banks achieved double-digit growth in net income.

Specifically, on October 29, Bank of Jiangsu released its third quarter report for 2024, achieving operating income of 62.303 billion yuan for the first three quarters, a year-on-year increase of 6.18%; net income attributable to shareholders of the listed company was 28.235 billion yuan, a 10.06% year-on-year increase. Among them, the net income attributable to the owners of the parent company in the third quarter of this year was 9.504 billion yuan, a 10.08% year-on-year increase; basic earnings per share were 1.50 yuan.

On the previous day, October 28, Bank of Ningbo released its third quarter report for 2024, with the company achieving operating income of 50.753 billion yuan for the first three quarters, a year-on-year increase of 7.45%; net income attributable to shareholders of the listed company was 20.707 billion yuan, a 7.02% year-on-year increase. Among them, the net income attributable to shareholders of the listed company in the third quarter was 7.058 billion yuan, a 10.25% year-on-year increase. Basic earnings per share were 3.08 yuan.

It is worth mentioning that according to incomplete statistics, looking at the listed banks that have already released their third quarter reports this year, many banks have achieved double-digit growth in net income attributable to the owners for the first three quarters of this year, including Jiangsu Changshu Rural Commercial Bank, Bank of Qingdao, and Bank of Hangzhou.

The sector has accumulated a rise of over 30% since the beginning of the year, how should we view the future market situation?

In terms of the performance of the bank sector in the A-share market, the cumulative increase since the beginning of the year is very significant. Looking at the banking index (886052), it increased slightly by 0.04% on October 29, and as of the closing on that day, the cumulative increase since the beginning of the year reached 34.83%.

How to view the future market trends of the banking sector, as indicated in the research report from Citic Sec, since the third quarter, the absolute return logic of the banking sector has continued, significantly influenced by market attack sector rebounds, the relative return of the sector has weakened, the proportion of bank stocks in actively managed funds' significant holdings has remained relatively stable, still at historically low levels. Looking ahead, the institution believes that the value appreciation of bank stocks comes from investors rebuilding the logic framework of RMB asset investment, the protection of equity value by low-volatility and stable products is the realistic choice for funds in this framework, the relief of entity risks brought by policy assistance, especially the relief of credit risks in urban investment and real estate sectors, further strengthens the investment value of bank stocks, recommending actively increasing allocation.

From the perspective of dividend yield, Ping An Securities points out that in terms of stock allocation, it continues to emphasize the value of allocating bank stocks as fixed-income assets. With the decline in interest rates at both ends of deposits and loans, the future risk-free interest rate center will continue to move down, highlighting further the value of bank-based high-dividend fixed-income allocations. Looking at the dividend amount in 2023 and the market capitalization on October 28th, the average dividend yield of the sector reaches 4.61%, still historically high compared to the risk-free rate based on the 10-year government bond yield, and continues to widen, with the dividend attractiveness continually increasing. Combining the sector's current static PB valuation at only 0.63 times, corresponding to an implied non-performing loan ratio exceeding 15%, the safety margin is quite sufficient, highlighting the sector's allocation value.

This article is reprinted from 'Wind Financial Terminal', edited by Zhixintong Finance: Li Fo.