The opportunity cost of investing in bank stocks remains relatively low. Current data shows the 10-year government bond yield at 1.80%, still near historical lows, while bank stock dividends approach 4.4%, representing a 2.6 percentage point premium over the 10-year bond yield.
Commercial banks are experiencing a broad-based recovery in net profits, as evidenced by recent preliminary earnings reports from over 10 banks.
By February 12, 2026, 12 listed banks had released their 2025 preliminary results. All except Huaxia Bank achieved positive net profit growth: Qingdao Bank's net profit attributable to shareholders increased by over 20% year-on-year, while Qilu Bank, Hangzhou Bank, and SPD Bank all recorded growth exceeding 10%. Huaxia Bank reported a 1.72% decline in net profit attributable to shareholders compared to the end of 2024.
In contrast, during the first three quarters of 2025, commercial banks accumulated a total net profit of 1.87 trillion yuan, down 0.02% year-on-year. State-owned large banks, city commercial banks, and private banks achieved profit growth rates of 2.27%, 1.73%, and 7.09% respectively, while national joint-stock banks, rural commercial banks, and foreign banks saw declines of 2.1%, 7.36%, and 19.34%.
Analyst Zhang Shuaishuai from China International Capital Corporation recently predicted that in 2026, listed state-owned banks, national joint-stock banks, and regional banks would achieve revenue growth of 2.7%, 0.6%, and 5.0% respectively, with net profit growth rates of 2.0%, 0.2%, and 6.5%, showing improvement compared to 2025.
Despite improving fundamentals, bank stock performance has diverged significantly. As of the market close on February 13, 2026, 24 of 42 A-listed banks had seen their stock prices decline since the beginning of the year, with the top four decliners being state-owned large banks and national joint-stock banks. The top gainers were Qingdao Bank, Ningbo Bank, Chongqing Rural Commercial Bank, and Hangzhou Bank, with increases of 21%, 11%, 6%, and 6% respectively.
The high dividend yield rationale persists, but with industry recovery, the market is paying more attention to commercial banks' return on equity. High-quality banks have greater potential for valuation expansion, according to banking industry sources.
Four banks achieved double-digit net profit growth in recent preliminary 2025 results. Qingdao Bank reported net profit of 5.188 billion yuan, Qilu Bank 5.713 billion yuan, Hangzhou Bank 19.03 billion yuan, and SPD Bank 50.017 billion yuan, representing growth rates of 21.66%, 14.58%, 12.05%, and 10.52% respectively.
Other banks also showed solid profit growth. Nanjing Bank's net profit rose 8.08% year-on-year, Ningbo Bank increased 8.13%, and Sunong Bank grew 5.04%.
Huaxia Bank was the only listed bank reporting negative profit growth. In 2025, the bank achieved total profit of 34.174 billion yuan, down 4.75% from 2024, with net profit attributable to shareholders of 27.2 billion yuan, declining 1.72%. Total assets reached 4.737619 trillion yuan, up 8.25% from the end of 2024.
Overall, commercial bank profits are recovering. Data shows commercial banks accumulated net profit of 2.4 trillion yuan in 2025, up from 2.3 trillion yuan in 2024. In the first three quarters of 2025, accumulated net profit was 1.87 trillion yuan, down 0.02% year-on-year, with the decline narrowing compared to the first half. First-half 2025 profit was 1.2 trillion yuan, down 1.2%, while first-quarter profit was 656.765 billion yuan, down 2.32%.
According to Zhang Shuaishuai, 2026 banking fundamentals show clear improvement logic. Revenue improvement is more evident, mainly due to deposit repricing and industry self-discipline constraints leading to liability cost declines exceeding asset yield decreases. Net interest margin declines are narrowing or stabilizing, while credit growth remains steady in the first year of the 15th Five-Year Plan, potentially turning net interest income growth positive for the full year. For non-interest income, intermediary income may see slight growth benefiting from resident asset reallocation in the low-rate environment, while other non-interest income is not expected to be a major drag amid bond market volatility.
Banking industry analysts expect sector interest margins to bottom out. Considering balanced policy rate adjustments,收敛 in new loan rate excess declines, and time deposit maturities, 2026 net interest margin may decline by 4 basis points, with full-year net interest income growth potentially turning positive.
The People's Bank of China's Fourth Quarter 2025 Monetary Policy Report showed new corporate loan rates and individual mortgage rates both around 3.1% in December 2025.
Since the fourth quarter of 2024, multiple banks have adjusted consumer loan rates集中,一度 falling below 3%. However, this trend reversed in March 2025, with most loan product rates remaining at or above 3% since.
The report also indicated that next-stage monetary policy will focus on continuously piloting explicit corporate loan comprehensive financing costs to maintain low overall social financing costs, compared to previous wording emphasizing "reducing" social financing costs.
The 12 listed banks also disclosed asset quality: 11 banks saw non-performing loan ratios decrease or remain flat. Qingdao Bank's NPL ratio fell to 0.97% at end-2025, down 0.17 percentage points from year-end 2024. Industrial Bank and Xiamen Bank were the only two with rising NPL ratios, reaching 1.08% and 0.77% respectively.
Under risk prevention measures, 2026 asset quality is expected to remain robust, with some pressure on retail credit while corporate credit maintains relatively low levels, according to state-owned bank sources.
Despite improvements in profitability and asset quality shown in 2025 results, listed bank stock prices have further diverged since 2026.
Data shows 18 listed banks saw stock price increases as of February 13, 2026, with top gainers Qingdao Bank, Ningbo Bank, and Chongqing Rural Commercial Bank rising 21%, 11%, and 6% respectively.
Qingdao Bank's stock began rising around January 20, 2026, closing at 4.3 yuan per share that day, and reached 5.43 yuan by February 13.
Among the 12 banks, Qingdao Bank was one of the few with逆势 growth in weighted average return on equity for 2025, reaching 12.68%, up 1.17 percentage points from end-2024.
By end-2025, Qingdao Bank's total assets reached 814.96 billion yuan, increasing 124.997 billion yuan or 18.12% from end-2024, slower than its 24% net profit growth. From 2023 to 2025, the bank's total assets grew at an annualized compound rate of 15.4%, while profits grew 18.9%.
Industrial Bank's total assets reached 11.09 trillion yuan in 2025, up 5.57% from the previous year. The bank mentioned achieving "balanced总量, reasonable structure, and improved quality" in assets and liabilities in recent preliminary results.
Industry analysts suggest slowing balance sheet expansion will likely become the trend. On February 11, 2026, CICC stated that the central bank's emphasis on maintaining low social financing costs and reducing bank liability costs actually promotes normal bank operations and sustainable profit levels rather than单纯 pursuing scale through price concessions.
Meanwhile, 24 listed banks experienced declining stock prices, with some state-owned large banks and national joint-stock banks seeing significant drops. Analysts attribute this to large capital outflows from broad-based ETFs, where banks (particularly state-owned large banks and national joint-stock banks) have high weightings in major indices, creating substantial selling pressure on the sector. Combined with inactive trading during the "spring躁动period," short-term stock prices face pressure.
CICC calculations show that from early 2026 to early February, ETFs tracking bank stock indices experienced cumulative net outflows of 911.1 billion yuan, with major broad-based indices accounting for 907.3 billion yuan (99.6%), resulting in 92.1 billion yuan net outflows from the banking sector, representing 13% of同期 turnover, with single-day peaks reaching 33%.
The era of "buying bank stocks with eyes closed" has ended.
In 2025, 33 banks saw stock price increases, with 19 rising over 10%. In 2024, 41 banks achieved positive returns, with 11 gaining over 50%.
Regarding 2026 bank stock prospects, Zhang Shuaishuai believes that without strong macroeconomic recovery expectations and with low interest rates continuing, banks remain high-quality high-dividend assets. Current average A-share bank price-to-book ratios have fallen to 0.54 times, about one standard deviation below the average since 2018, while dividend yields are near the average since 2018, indicating attractive valuations.
Thus, the opportunity cost of investing in bank stocks remains relatively low. Current data shows the 10-year government bond yield at 1.80%, still near historical lows, while bank stock dividends approach 4.4%, representing a 2.6 percentage point premium.
For individual bank stocks, Guolian Minsheng Monetary Finance Research Institute notes the market is shifting from liquidity-driven to fundamentals-driven approaches, moving from dividend buying to valuation expansion, with performance factors明显outperforming. High-growth, high-ROE quality fundamental banks lead gains, reflecting a market logic transition from high dividend yields to price-to-book/return-on-equity frameworks, allowing valuation expansion space for quality banks.
According to China Post Securities analyst Zhang Yinxin, benefiting from time deposit maturity repricing, some banks may see significant interest margin improvement. Meanwhile, supported by new policy financial instruments, fixed asset investment growth in key provinces and cities may improve明显, potentially driving maintained high scale growth for local city and rural commercial banks. He recommends focusing on banks with large deposit maturities and potential超预期 interest margin improvement, and city commercial banks benefiting from fixed asset investment improvements.
Other banking sources suggest four investment themes: increasing allocations to high-profitability city commercial banks at reasonable valuation support levels; maintaining core positions in high-dividend large banks; monitoring convertible bond强赎 expectations that may catalyze associated stock movements; and early positioning in banks with significant valuation discounts and potential for sustained earnings recovery.
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