The Zhitong Finance App learned that Huafu Securities released a research report saying that up to now, a total of 11 banks have announced mid-term dividend ratios, and many banks have medium-term dividend ratios higher than 30%. Bank mid-term dividends reinforce the high-dividend investment logic of bank stocks. China is currently in an economic transition period, and bank stocks with stable cash returns are more cost-effective. In terms of investment targets, the first is to focus on recommending SPD Bank (600000.SH). SPD Bank is in the phase of reversing the difficult situation. Currently, the company's bad stock is close to being cleared, the bad generation rate continues to decline, credit costs have improved marginally, and profit flexibility is expected to be released. Furthermore, since the fourth quarter of last year, the company has increased its credit investment efforts, and the increase in credit asset investment momentum is expected to drive up revenue growth. Second, it is recommended to focus on Bank of Jiangsu (600919.SH), a high-performing regional bank with high dividend rates.

The main views of Huafu Securities are as follows:

Performance: Revenue growth slowed marginally, profit growth was relatively stable

Revenue growth slowed in the second quarter. Judging from the changes in revenue growth in a single quarter in the second quarter compared to the first quarter, there was a marginal increase in 25 listed banks and a marginal increase in 17 listed banks. Overall, the average change of all listed banks was -2.2 pct.

The growth rate of net profit to mother was relatively stable in the second quarter. Judging from the growth rate of net profit in a single quarter in the second quarter compared to the first quarter, there was a marginal increase in 25 listed banks and a marginal increase in 17 listed banks. Overall, the average change of all listed banks was -0.6 pct, which remained relatively stable.

Net interest spread: Continued decline, but the year-on-year decline is expected to gradually stabilize

Judging from the changes in net interest spreads for a single quarter in the second quarter compared to the first quarter, 33 listed banks declined marginally, and 9 listed banks rose marginally. The year-on-year decline in net interest spreads is expected to gradually stabilize. Overall, net interest spreads continued to decline month-on-month in the second quarter due to lower LPR and increased market competition, with an average change of -4.5 bps.

Looking ahead to the next stage, net interest spreads will continue to decline, but due to favorable debt-side releases, the year-on-year decline in net interest spreads is expected to stabilize.

Loan investment: growth is slowing, shifting from scale thinking to structural thinking

Judging from the changes in loan growth in the first half of the year compared to the first quarter, all 35 banks showed a trend of marginal deceleration. First, under the guidance of supervision, banks downplay scale complexes and pay more attention to loan structure and quality. Second, due to insufficient demand from entities, demand for loans has declined accordingly. There is a marginal increase in the loan growth rate of seven banks, especially banks located in the Yangtze River Delta. To a certain extent, it also reflects the rapid recovery of the real economy and the recovery of credit demand in the Yangtze River Delta region. It is expected that downsizing and focusing on structure and quality will continue to be a trend in the next phase.

Mid-harvest: The first half of the year was in a slow repair process, and the repair speed is expected to accelerate in the second half of the year

Judging from the changes in the growth rate of net transaction fee revenue in a single quarter in the second quarter compared to the first quarter, the growth rate of 19 banks is still bottoming out, while 20 banks have recovered to varying degrees, and the decline has narrowed somewhat.

Looking ahead to the second half of the year, it is expected that, driven by economic recovery and improvements in the market environment, combined with last year's low base effect, the net revenue growth rate from handling fees is expected to bottom out and rise again.

Other non-interest: Contributions have weakened and are expected to weaken further at last year's high base

The bond market has strengthened since the fourth quarter of 2023. Banks have received high returns from bond investments, and other non-interest income in 2024Q1 contributed significantly to revenue. In the second quarter, against the backdrop of a slowdown in interest rates on long-term bonds, the contribution of other non-interest income weakened. Judging from the changes in the growth rate of other non-interest income in a single quarter in Q2 compared to the first quarter, the growth rate of other non-interest income of a total of 27 banks all slowed markedly.

Looking ahead to the second half of the year, the growth rate of other non-interest net income is expected to decline further under the influence of the high base in the fourth quarter of last year.

Asset quality: Attention rate has increased, provision coverage rate has declined slightly

The defect rate is relatively stable. Judging from the change in the non-performing rate at the end of the second quarter compared to the end of the first quarter, a total of 18 banks remained unchanged, 14 had a marginal decline, and 10 banks had a marginal increase.

The attention rate has fluctuated. Judging from the changes in attention ratings at the end of the second quarter compared to the end of the first quarter, there was a marginal increase in the attention ratings of 25 banks and a marginal decline (other banks did not disclose interest rate data). On the one hand, they were affected by policies to strictly determine asset classification, and on the other hand, pressure on asset quality in the retail sector.

Provision coverage has declined. Judging from the changes in provision coverage at the end of the second quarter compared to the end of the first quarter, a total of 25 banks declined marginally and 17 banks increased marginally, but overall, provision coverage is still at a high level.

Mid-term dividends: A number of banks announced specific plans for mid-term dividends

Up to now, a total of 11 banks have announced mid-term dividend ratios, and many banks have medium-term dividend ratios higher than 30%. Bank mid-term dividends reinforce the high dividend investment logic of bank stocks. China is currently in an economic transition period, and bank stocks with stable cash returns are more cost-effective.

Risk warning

The effects of the policy fell short of expectations, and the market style changed.