Citigroup has released a research report projecting that the Chinese banks it covers will maintain resilient revenue growth in the second quarter of 2026, with an estimated year-on-year increase of 6.8%. This represents a moderation from the 7.4% growth seen in the first quarter of 2026, primarily attributed to a high base effect from trading gains. The second-quarter revenue growth is expected to be supported by several key factors, including still relatively robust year-on-year corporate loan growth, albeit slightly slower than in the first quarter; a quarter-on-quarter stabilization in net interest margins; and strong growth in fee-based income.
The report anticipates that asset quality for the Chinese banks will remain stable in the second quarter of 2026. However, banks are expected to utilize their strong revenue growth to make additional provisions as a precaution, which is forecast to result in a net profit increase of 2.9% year-on-year, a growth rate lower than that of revenue.
Citigroup expects large state-owned banks and regional banks to outperform joint-stock banks, primarily benefiting from better corporate loan growth. Revenue growth is projected to be more robust for the 'Big Four' state-owned banks and regional lenders such as Bank of Nanjing (601009.SH) and Bank of Ningbo (002142.SZ). Meanwhile, Bank of Ningbo, Bank of Hangzhou (600926.SH), and Bank of Changshu (601128.SH) are forecast to see faster profit growth.
Among the covered banks, CQRC BANK (03618) and MINSHENG BANK (01988) are identified as potentially delivering second-quarter results that exceed market expectations. Conversely, the performance of China Everbright Bank (06818, 601818.SH) may disappoint.
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