On October 19, all 42 listed banks in the A-share market closed higher. As of the close, Bank of Suzhou Co., Ltd. (SZ: 002966), Agricultural Bank of China Ltd. (SH: 601288), Bank of Qingdao Co., Ltd. (SZ: 002948), and Postal Savings Bank of China Co., Ltd. (SH: 601658) rose more than 3%, with Bank of Suzhou Co., Ltd. (SZ: 002966) up 3.89%. Bank of Ningbo Co., Ltd. (SZ: 002142), Bank of China Ltd. (SH: 601988), Bank of Hangzhou Co., Ltd. (SH: 600926), Jiangsu Zhangjiagang Rural Commercial Bank Co., Ltd. (SZ: 002839), Bank of Nanjing Co., Ltd. (SH: 601009), Wuxi Rural Commercial Bank Co., Ltd. (SH: 600908), Bank of Chengdu Co., Ltd. (SH: 601838), and Bank of Changsha Co., Ltd. (SH: 601577) each gained more than 2%. Shares of Industrial and Commercial Bank of China Ltd. (SH: 601398) and China Construction Bank Corporation (SH: 601939) hit record intraday highs, with Industrial and Commercial Bank of China Ltd. (SH: 601398) closing at 8.6 yuan per share and China Construction Bank Corporation (SH: 601939) closing at 11.57 yuan per share, both pushing their total market capitalizations above the 3 trillion yuan mark to 3.07 trillion yuan and 3.03 trillion yuan, respectively. The data comes from Tonghuashun iFinD.
Regarding the recent sustained rise in bank stocks, Fu Yifu, a special researcher at Suzhou Commercial Bank, told Caiwen that the current rally in bank shares is the result of three factors working together: policy catalysts, an inflection point in fundamentals, and capital rebalancing. On the policy side, measures such as the PSL rate cut, housing loan interest subsidies, and capital injections into major banks have shifted the sector's logic from pure defense toward stabilizing mortgages and expanding credit. On the fundamentals side, the net interest margin posted its first quarter-on-quarter rebound in nearly four years in the second quarter, easing downward pressure on interest spreads, and third-quarter revenue growth is expected to improve marginally, with non-interest income also providing additional support. On the capital side, high-level volatility in the technology sector has driven risk-averse funds toward low-valuation, high-dividend assets, serving as a direct short-term driver.
Fu Yifu believes that whether this rally can continue depends on whether it can shift from being capital-driven to being earnings-driven: the first phase of valuation repair has been fairly thorough, and what matters going forward is whether third-quarter reports can turn stabilizing interest margins and bottoming profits from expectations into reported facts. The room for further overall sector valuation upside is narrowing, and the continuation of the trend is more likely to show divergence rather than a broad rally.
It is worth noting that in this round of gains, the share price trajectories of state-owned major banks, joint-stock banks, and city commercial banks have diverged somewhat. As of the October 19 close, state-owned major banks rose 2.25%, city commercial banks rose 1.74%, rural commercial banks rose 1.35%, and joint-stock banks rose 0.93%. Fu Yifu believes this divergence is not simply style rotation, but rather a structural gap caused by differences in funding costs and regional endowments. He analyzed that the advantage of state-owned major banks lies in low-cost deposit accumulation and their policy-oriented functional positioning. In a low-interest-rate environment, their liability-side advantages are amplified, and earnings stability emerges earlier. By contrast, the elasticity of leading city commercial banks is reflected in their leading profit growth, relying on regional economic density and corporate lending capacity, but internal divergence is pronounced, and only a small number of top institutions can deliver growth. In addition, joint-stock banks lack both the liability advantages of state-owned major banks and the regional rootedness of city commercial banks, while also facing the fading retail dividend, leaving them in a relatively awkward position.
Fu Yifu reminded ordinary investors that when participating in bank sector investment, they should first recognize that bank stocks are core holdings rather than speculative trading tools. In terms of allocation, state-owned major banks can serve as a base position, balancing dividend income with valuation repair opportunities, while a moderate allocation to high-quality regional banks can serve as a limited offensive position. At the same time, investors should avoid banks with artificially high dividend yields and pressured asset quality. Participating in batches and extending the holding period better fits the risk-return characteristics of this type of asset than chasing elasticity during sector pulse rallies.
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