CITIC Securities has released a research report stating that in 2027, the financial industry is at the intersection of the "15th Five-Year Plan" structural restructuring and valuation reshaping. On one hand, the industry's operating logic is shifting from "scale expansion" to "structural restructuring and capability enhancement"; on the other hand, profit improvement and low valuations are forming a resonance, and allocation value is shifting from "betting on beta elasticity" to "capturing dividend returns." The main viewpoints of CITIC Securities are as follows:
Financial Structural Restructuring Under the 15th Five-Year Plan: Five Major Shifts Are Interconnected
In terms of financing structure, the proportion of direct financing in the stock of social financing has approached one-third, and the financial system is moving from "bank-dominated" to "dual-driven by banks and capital markets." The expansion of direct financing requires price signals to play a greater role, and monetary policy is therefore shifting from quantity-based regulation to price-based regulation, with financial aggregates also returning from "targets" to "observations." The transformation of the regulatory framework is further reflected in the step-down of M2 and loan growth rates, with "slowing aggregate growth, improving structural quality" becoming the new normal. Meanwhile, financial opening-up is advancing functional opening along the main line of RMB internationalization, with credit and capital allocation systematically converging toward the "five major articles" of technology, green, inclusive, pension, and digital finance.
Structural changes are transmitting to sub-sectors: the direction is consistent, but the paths differ. Banks are transitioning from high-speed growth to high-quality development, with the income statement core shifting toward a rebalancing of "price" and "quality." The insurance industry's positioning is being reshaped, strengthening its functions of long-term risk management and patient capital supply. Brokerages are transforming from financing channels to full-lifecycle comprehensive service providers, with the ROE center steadily rising. The three sub-sectors are moving in the same direction—profit quality matters more than scale elasticity, which also forms the foundation of dividend attributes.
PB-ROE Valuation System and Dividend Tiering: Strong Profitability, Low Valuation
Over the past two years, bank ROE has been stable while insurance and brokerage ROE have improved, but PB valuations have been suppressed by market style and capital flows, leaving financial stocks overall in a high cost-performance range. Ranked by earnings certainty from high to low, dividends show clear tiering: banks represent traditional dividends, with ROE stabilization reinforcing the dividend logic, a dividend yield of approximately 3.9%, and a static PB of about 0.61x, making them suitable long-term for low-volatility, steady-type capital; insurance represents extended dividends, with leading insurers having ample capital—as of the end of 1H26, the "old seven" had core/comprehensive solvency adequacy ratios of 140.0%/203.8%—clear dividend rules, and high certainty of DPS growth; brokerages represent new dividends, with payout ratios converging toward 30%–40%, and in 2026 leading brokerages' A/H share forecast dividend yields at approximately 4.4%/7.0%, gradually revealing cash return value.
Industry Ranking: Dividend Banks First, Non-Bank Financials Provide Elasticity and Alpha
Based on the above framework, the industry ranking is "banks > non-bank financials." Banks are the top choice: interest margins are stabilizing at the margin, asset quality expectations are stable, revenue and profit growth are bottoming out and recovering, and the first derivative of ROE has already improved. It is expected that the absolute ROE level will stabilize at 8%–9% over the next two years, and PB is expected to recover to 0.8–1x. Their dividend yield and dividend stability align with the allocation needs of long-term capital such as insurance funds, making them the ballast of the portfolio, and the seesaw effect with technology stocks means that both relative and absolute returns during style switches are worth anticipating. Non-bank financials come next: brokerages are already at a dividend-supported valuation bottom, and a decline in trading activity in 2027 may temporarily weigh on performance, but direct investment returns from technology IPOs, the internationalization second curve of leading brokerages, and the building of first-class investment banks will still provide upward elasticity. Insurance is shifting from a beta asset to an income-generating alpha asset, and the three trends of declining liability costs, relaxed capital constraints, and normalized dividends have not yet been fully priced in, with valuation mean reversion foreseeable.
Risk Factors
A sharp downturn in macroeconomic growth; significant volatility in capital markets and a decline in A-share turnover; large fluctuations in interest rates or credit risk exceeding expectations; unexpected changes in regulatory policy; worse-than-expected deterioration in bank asset quality; sluggish policy sales, among others.
Investment Strategy
Regarding banks, changes in the capital market narrative are the core factor, and the sector is entering the tail end of its risk cycle, with potential for revaluation from a "high-dividend defensive asset" to a "high-certainty equity asset." Regarding insurance, leading insurers have ample capital and predictable dividends. Regarding securities, with progress centered on building first-class investment banks, industry profit is expected to grow 30.3% year-on-year in 2026, with ROE reaching 8.38%; current A/H share PBs are 1.20x/0.63x, at the 5.9%/25.3% percentiles since 2016.
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