According to Morgan Stanley's report, seven state-owned banks held shareholder meetings in the past few days, with the minutes of the meetings released by China Construction Bank (03968.HK), Industrial and Commercial Bank of China (01398.HK), and China Minsheng Bank (01988.HK). The bank believes that the industry's interpretation is positive due to the stabilization of net interest income and asset quality.

According to Morgan Stanley, the Industrial and Commercial Bank of China's shareholder meeting had the most positive revelations, as management stated that net interest margin may exceed previous guidance, loan growth will be higher than peers, and the non-performing loan formation rate of credit card loans is decreasing. The loan-to-value ratio (LTV) of real estate developer loans is only 42%, and the local government debt reduction plan has increased the return on local government financing-guaranteed loans, all of which have improved asset quality.

The report states that China Construction Bank's shareholder meeting had a more neutral outlook because there were no new information or guidance given. The minutes of China Minsheng Bank's shareholder meeting were negative because management was cautious about net interest margin, and the asset quality is unlikely to improve significantly from its current level.

According to Morgan Stanley, while net interest margin stabilizes for banks, different banks have different trends. If LPR is lowered again in the third quarter, it is expected that net interest margin for the FY2024 will be lower than that of the first quarter by a single digit basis point. The comments of the three banks mentioned above suggest that ICBC's net interest margin narrowing may be the lowest, while China Minsheng Bank's may be the highest. The bank believes that China Minsheng Bank will face greater pressure as demand for small and medium-sized enterprise loans is insufficient, while the bank is trying to optimize its asset-liability table.