Chinese banking stocks staged a strong rally on Tuesday, with the Big Four state-owned banks all hitting new all-time highs.
Industrial and Commercial Bank of China (ICBC) reached a peak of 7.14 yuan per share at one point, with a market value exceeding 2.3 trillion yuan, firmly holding the position of the highest market cap in the A-shares market. Banks such as Qilu Bank, Shanghai Pudong Development Bank, and CITIC Bank also recorded significant gains.
The strong performance of bank stocks was partly supported by stable and improving earnings, as well as a better-than-expected increase in China’s credit expansion in January, leading to steady growth in bank loans, analysts say.
The strong performance of bank stocks is partly supported by steady and improving earnings. According to Wind Information, 16 listed banks have disclosed their 2024 earnings reports, with 12 of them reporting both revenue and net profit growth, accounting for 75% of the total.
Overall, these 16 listed banks showed a general increase in net profits, with only Xiamen Bank experiencing a slight decline of 2.61%. Eight of the listed banks, including Shanghai Pudong Development Bank, Qingdao Bank, Hangzhou Bank, Qilu Bank, and Jiangsu Bank, reported a net profit increase of over 10%. Banks such as Nanjing Bank, Hangzhou Bank, Jiangsu Bank, Qingdao Bank, Ningbo Bank, and Chengdu Bank also reported revenue growth of over 10% in 2024.
Dongxing Securities said in a note that the bank earnings reports show overall stability and growth, with significant contributions from non-interest income growth in a favorable bond market environment, as well as a recovery in high-quality regional credit demand, which is likely to lead to stable profit growth for listed banks in 2024.
The latest data released by the People’s Bank of China showed that China’s total social financing increased by 7.06 trillion yuan in January, marking a new high for the same period and a year-on-year growth rate of 8.0%, exceeding expectations, and yuan loans to the real economy increased by 5.22 trillion yuan, which was 3.79 trillion yuan more than the previous year.
Industrial Securities said that the credit performance in January was strong, with banks being more proactive in increasing loan issuance, and the release of previously prepared projects resulted in a year-on-year increase in credit issuance, exceeding market expectations.
Xiangcai Securities believes that the January social financing improvement exceeded expectations, with steady growth in bank loans, with a strong momentum of corporate loans.
The broker expect that with the support of real estate and debt-restructuring policies, the asset quality of banks will continue to improve, thus enhancing the stability of bank operations.