ZENG Lingjun
Ningbo Bank, Changshu Bank and Bank of Hangzhou have emerged as the top targets for investors this year, as China's listed lenders drew record levels of institutional research in the first half.
According to data from Eastmoney Choice, 19 A-share banks hosted more than 1,000 institutional visits or online meetings between January and June, the highest tally in recent years.
"This year, the level of interest is completely different," an investor relations officer at a city commercial bank told Jiemian News. "In the past, hardly any institutions paid attention to bank stocks, but now we've already held two rounds of research visits, mainly from brokerages and insurance asset managers."
The surge in engagement follows a strong rebound in bank shares. Forty-one out of 42 listed lenders gained in the first half, lifting the sector's combined share price by 13.1 per cent. Shares of Bank of Qingdao and Shanghai Pudong Development Bank jumped more than 30 per cent.
Foreign funds have also joined the rush. In May, analysts from Millennium Management visited Ningbo Bank, while Bank of Hangzhou received delegations from Lazard Asset Management and other overseas investors.
XUE Hongyan, a special researcher at Jiangsu Bank, said the flood of research reflects growing conviction that banks offer value amid China's uneven economic recovery. "With valuations recovering to multi-year highs, institutions are trying to look beyond policy tailwinds to see whether the high-dividend, low-valuation story is sustainable," he told Jiemian News.
Dividend payouts have become a powerful draw. Wind data shows 39 listed banks raised their cash dividends this year, boosting total payouts by 18.6 billion yuan. The sector's average dividend yield reached 5.04 per cent, far above the 1.65 per cent yield on 10-year government bonds.
"The pressure to deploy funds is enormous," said a fixed-income analyst at an insurance asset manager. "Yields above 4 per cent are scarce. For many banks, dividends alone can cover our funding costs."
Investor questions have focused on asset quality, margins and payout policies.
Shrinking net interest margins are under particular scrutiny. Shanghai Bank said it would tighten deposit pricing and promote shorter-term funding to lower costs. Qingdao Rural Commercial Bank is shifting deposits from high-cost to medium-term products.
"Margins are the key variable for earnings this year," said a banking analyst at an eastern China brokerage.
Despite a decline in official non-performing loan ratios to 1.5 per cent last year, overdue loans have climbed, especially among rural lenders. Qilu Bank said its asset quality indicators have improved steadily and should continue to strengthen in 2025.
Dividend policies have also come into sharper focus after new regulatory guidelines tightened scrutiny of payouts. Bank of Hangzhou plans to maintain stable dividends and aims to distribute cash twice a year, linking payouts to profit growth.
"High-dividend banks are naturally more appealing to long-term funds," the insurance analyst said. "In this environment, stable payouts are a big reason we're increasing allocations."
Looking ahead, Xue said investors will likely watch whether margins have bottomed, how lending shifts to green and tech finance, and whether digital transformation can deliver new growth. "These will be critical to assessing banks' long-term competitiveness," he said.
