Has the value of bank stocks been discovered by more asset management institutions?

Last Friday, while the market was highly focused on the Ministry of Finance's package bond policy, on the evening of November 8th, China CITIC Financial Asset Management Co., Ltd. quietly released an announcement regarding the 'further promotion of investment allocation.'

In the announcement, CITIC Financial Assets explicitly stated that in order to maximize shareholder interests, they will invest approximately 50.3 billion yuan in a package investment plan, with 30 billion directly used to purchase shares of institutions such as Bank of China and China Everbright Bank. Caixin reporters noted that based on the information disclosed in the CITIC Financial Assets announcement, they are already shareholders of Bank of China and China Everbright Bank, so this 'further purchase' can be seen as a shareholding action.

A banking industry analyst from a brokerage firm told Caixin reporters that institutions like CITIC Financial Assets buying bank stocks is inevitable. As large institutional funds, due to considerations such as risk control and capital return, they are more likely to prioritize 'high dividend stocks' rather than thematic stocks. Meanwhile, with the continuous release of favorable policies for bank stocks in the recent period (such as the Ministry of Finance supplementing the core tier-one capital of the six major banks), the investment value of bank stocks, especially those of top institutions, remains significant.

CITIC Financial Assets speaks out to buy shares of Bank of China and China Everbright Bank

On the evening of November 8th, CITIC Financial Assets released an announcement on its official website. In the announcement, CITIC Financial Assets stated that in recent years, the company has seized market opportunities and carried out a series of investment allocations, achieving positive results. To maximize shareholder interests, the company plans to increase its investment efforts based on previous investments.

CITIC Financial Assets also revealed three major investment targets and an asset service trust investment (four transactions). The first is to further purchase 4.88% of CITIC's shares through a share transfer agreement at about 11.266 billion yuan. The second is to further purchase shares of Bank of China not exceeding 26 billion yuan. The third is to further purchase shares of China Everbright Bank not exceeding 4 billion yuan.

In addition, Citic Financial Assets will entrust Citic Trust (as trustee), Citic Securities (as advisor), Citic Securities Co., Ltd. (as advisor), and China Citic Bank Corporation (as custodian) to set up a single asset service trust with a total investment not exceeding RMB 20 billion. It is worth noting that Citic Financial Assets stated that the above four transactions are interdependent, interrelated, and mutually supportive, forming a comprehensive arrangement together.

Finally, Citic Financial Assets stated that the above three transactions are planned to be implemented within 12 months from the day the single asset service trust plan is formally approved at the extraordinary general meeting. If it is not completed within this period, the company will perform the corporate governance procedures as needed.

Caifeng reporter noticed that at the 2024 mid-term performance briefing of Citic Financial Assets, Chairman Liu Zhengjun stated that from an overall perspective, Citic Financial Assets has pressed the fast-forward button on the transformation of its main business, further enhancing the capabilities of the four major business areas: acquisition and disposal, mergers and restructuring, equity investments, and special bond investments.

Furthermore, according to the latest data from East Money Information, among the top ten shareholders of China Everbright Bank, Citic Financial Assets ranks fourth with a 7.08% shareholding. In the top ten shareholders of Bank of China, there is no trace of Citic Financial Assets. However, as indicated in this announcement, as of the date of this announcement, Citic Financial Assets holds 3.57% of the shares of Bank of China; Citic Financial Assets company holds 7.08% of the shares of China Everbright Bank (consistent with the latest data from East Money Information). This means that this transaction can be seen as an increase in the holdings of major shareholders in banks.

Banks' stocks have risen by more than 30% this year, with funds from institutions such as social security pouring in.

Since the beginning of this year, despite the overall fluctuations in the stock market, with many ups and downs, looking at the overall situation, the banking sector is still one of the most eye-catching sectors in the capital markets.

According to Wind data, the banking sector has risen by approximately 31.21% this year, with about 10 listed banks seeing gains of over 40%. Even behemoths like the five major state-owned banks have repeatedly set new historical stock price records this year. Looking at the Q3 reports disclosed by listed companies, the holdings of bank stocks by social security funds, public funds, and insurance funds have all shown significant increases.

In terms of performance, according to Wind data, a total of 42 listed banks achieved operating income of 4.28 trillion yuan, with net income attributable to the mother showing a small increase, growing by 1.43% year-on-year to 1.66 trillion yuan. Among them, 29 banks saw an increase in operating income, accounting for nearly 70%, with most of them showing single-digit growth; 35 banks achieved positive growth in net income attributable to the mother, accounting for over 80%. Among them, 10 listed banks saw double-digit growth in net income attributable to the mother, with Shanghai Pudong Development Bank achieving a net income attributable to the mother of 35.223 billion yuan, a 25.86% increase year-on-year, leading its peers.

On November 11th, Dongxing Securities analysts Lin Jinlu and Tian Xinyu released research reports stating that the significant narrowing of net interest margins in the past two years is the main negative factor affecting bank profitability and an important factor affecting fundamental expectations. Under the approach of monetary policy mainly constrained by net interest margins, subsequent policies will strengthen the linkage mechanism of pricing in the deposit and loan markets; coupled with the gradual implementation of countercyclical adjustment policies, economic recovery and gradual repair of real demand are expected. , it is expected that the bank's net interest margin will trend towards stability, with an increased probability of stabilizing next year.

At the same time, the effectiveness of fiscal policy is expected to alleviate the pressure on the quality of assets related to local financing platforms and real estate, and improve expectations for the quality of bank assets. The expectation of stabilizing net interest margins and improving asset quality is expected to gradually improve the profitability expectations of banks. Bank stocks are in a stage of relatively comfortable allocation where the bearish factors have been exhausted, valuations are still low, dividend yields are high and stable.