On November 21, according to the Financial Alliance news (Reporter Gao Ping), banks received intensive research from institutions. Bank of Hangzhou announced the content of institutional research this evening, including visits from institutions such as Industrial Bank and Huatai-PineBridge Fund. According to incomplete statistics from Wind, a total of 13 banks have received intensive institutional research since November. From the research questions, net interest margin pressure remains a key concern for institutions, and several banks were also asked about their upcoming project reserves and related structures.

At the same time, asset quality, dividends, and the situation of mortgage loan issuance are also main focuses of the market. Analysts from banks and brokerages stated that based on the research situation, the banks' interest margins and asset quality are manageable. Under static calculations, banks' interest margins are still under downward pressure in 2025, but the decline is narrowing. With policy support, the banks' fundamentals are becoming more stable. Focusing on the context of debt disposal, some regional banks stand to benefit from the improvement in fundamentals brought about by local economic development and debt replacement.

Since November, 13 banks have received institutional research. These areas are key for the upcoming projects.

Institutional enthusiasm for researching banks remains high. According to Wind's statistics, so far, a total of 13 banks including Bank of Shanghai, Bank of Suzhou, Bank of Ningbo, Jiangsu Zijin Rural Commercial Bank, Qilu Bank, and Bank of Qingdao have received institutional research in November.

In terms of research frequency, Bank of Shanghai, Bank of Qingdao, bank of guiyang, and Bank of Suzhou each received three visits, while Bank of Ningbo and Lanzhou Bank received two. Among them, Bank of Suzhou attracted the most visiting institutions, with nine; followed by Bank of Shanghai with seven; bank of guiyang and Bank of Ningbo both attracted six institutions for visits in November. Bank of Shanghai had visiting institutions on November 5th, 8th, and 13th, while bank of guiyang had visits on November 8th and 14th.

Regarding the issues of interest to institutions during research, several banks were asked about asset quality. As of the end of September 2024, the non-performing loan rate of Bank of Suzhou is 0.84%. The bank stated that it will further optimize crediting policies and approval strategies, and expects asset quality to remain stable throughout the year. Additionally, as of the end of the third quarter of 2024, the non-performing loan rate of Bank of Qingdao is 1.17%, down 0.01 percentage points from the end of the previous year, and the bank expects asset quality to maintain a stable trend throughout the year.

The quantity and structure of upcoming project reserves are also key concerns for institutions. For instance, Bank of Shanghai revealed that it is coordinating with various government agencies, key parks, and associations to gather information on major projects, assess customer needs, and promote project implementation, preparing for the upcoming projects. Currently, the asset project reserves are substantial, with about sixty percent of projects focused on technology finance, inclusive finance, and green finance. Bank of Suzhou stated that while effectively completing this year's crediting allocation, it is also actively promoting relevant work for crediting reserves in the next year.

Tonight, the bank of hangzhou disclosed the latest research information, stating that from the fourth quarter of this year to January next year, it is the period for the bank's crediting spring plowing action. Currently, the financing reserve situation for public lines is similar to the same period last year. The main credit investment, besides in infrastructure areas such as transportation, water conservancy, energy, municipal, and urban organic renewal, also shows adequate reserves in the real sector, with certain coverage ratios for crediting reserves among clients in manufacturing, technology finance, and small and medium-sized enterprises.

The pressure on interest margins is a frequently discussed issue. The industry is paying attention to the expected improvement in the fundamentals of some regional banks against the backdrop of debt disposal.

Narrowing interest margins is a common issue faced by the industry. According to the third-quarter reports, many banks remain in a state of narrowing interest margins. Next year, the pressure on bank interest margins will become a key focus for institutions. It is understood that the average deposit interest rate for the bank of shanghai in the first half of 2024 is around 2%. During institutional research, the bank was asked about the expected decrease in the deposit interest rate due to the reduction of the deposit benchmark rate and the pressure on interest margins for the next year. The bank of shanghai predicts that the cost of deposit interest in 2025 will maintain an improving trend, and the trend of narrowing interest margins will slow down.

"Affected by the decline in loan market quote rates, the replacement of existing mortgage rates, and loan repricing, the net interest margin is still under pressure," said the bank of lanzhou during the survey. The bank of hangzhou stated that considering the downward trend in the interest rates of newly issued loans, the adjustment of existing mortgage rates, and the impact of existing loan repricing, the net interest margin will still face downward pressure next year.

Huachuang Securities pointed out in its investment strategy for the banking industry in 2025 that based on static calculations, considering only the impact of current interest rate adjustments on the net interest margin of listed banks in 2025 is 12-13 basis points, the interest margin remains under downward pressure, but the overall decline will narrow. Additionally, asset quality remains robust and solid under policy support, and the fundamentals of the industry are becoming more stable. Attention is being paid to the expectation of improved fundamentals for some regional banks benefiting from local economic development and debt substitution against the backdrop of debt disposal.

Since November, banks that have received institutional research show that there are many small and medium-sized banks in the Jiangsu-Zhejiang region. Industry insiders stated that through long-term intensive research, there will be a comprehensive and deep understanding and judgment of the fundamentals of listed banks. Institutions are optimistic about the market performance of undervalued, high-dividend state-owned large banks and quality small and medium-sized banks.

Analyst Yang Xiaotian from Hualong Securities stated that the China Securities Regulatory Commission published the official version of the market cap management guidelines, which clearly specifies the market cap management requirements for major index constituent stocks and long-term companies trading below their net asset value. Listed banks are generally in a state of trading below net asset value, and regulatory requirements will help banks with lower price-to-book ratios to strengthen dividends and increase stake & buy back, gradually improving their valuation levels. Additionally, under the market cap management expectations of major index constituents, this will help bring long-term funds into the market, indirectly supporting banks and other high-dividend sectors.

"Recently, debt disposal may affect banks' net interest margins and credit growth, but under the premise of maintaining reasonable interest margin levels for banks, the improvement in banks' asset quality will effectively enhance the pace of future credit investment," Yang Xiaotian stated further, indicating that the valuation of listed banks is expected to benefit from improvements in asset structures.