Three-Year Bull Run for Major State-Owned Banks: What Drives Future Growth?

From 2023 to 2025, ICBC saw its share price increase by 117%, while CCB recorded a 98% gain. Among 15 diversified listed banks, these major state-owned institutions ranked in the top four.

In the short term, the stock market acts as a voting machine; in the long term, it serves as a weighing machine. Investors holding shares of the four major state-owned banks over the past three years have experienced significant price appreciation.

Data reveals that from 2023 to 2025, ICBC's stock rose by 117%, and CCB's increased by 98%, placing them among the top performers in the sector.

Share prices reflect the market's collective assessment of a bank's value. Analysts note that in recent years, as risks associated with smaller banks and non-bank financial institutions were addressed, China's banking sector has shown a trend of reverting to the dominance of major state-owned banks.

However, challenges such as low interest rates and an aging population have intensified. By the end of 2025, the net interest margins of these banks had fallen below 1.35%. Their future growth potential and transformation strategies are critical not only for investor returns but also for financial stability.

Recently, several banking experts emphasized that comprehensiveness, internationalization, and precision will be key to the sector's future. Suggestions include actively expanding into wealth management, investment banking, and financial market transactions, while increasing the proportion of fee-based and overseas income to shift profit models away from traditional interest spreads.

The President of ICBC stated that a bank primarily reliant on loans may fall short of becoming a world-class financial institution. He emphasized the need to evolve from a simple capital intermediary to a comprehensive service provider integrating capital, information, and efficiency.

Since early 2026, large net outflows from index funds have paused, and rising geopolitical tensions have caused sharp fluctuations in resource prices, forcing a rebalancing of risk preferences in capital markets. After recent adjustments, half of the banking stocks now offer dividend yields above 4.5%, combining defensive attributes with undervalued safety margins, making them attractive for investment.

With substantial government capital injections into state-owned banks, enhanced capital support is expected to bolster lending and unlock medium- to long-term growth opportunities. Analysts also highlight the importance of monitoring marginal changes in economic fundamentals, progress in resolving real estate risks, monetary policy adjustments, and RMB exchange rate trends.

**Three Consecutive Years of Soaring Stock Prices**

Since 2023, bank stocks, led by state-owned banks, have performed strongly.

Data shows that the four major state-owned banks achieved share price gains of 17% to 34% in 2023, 42% to 55% in 2024, and 11% to 53% in 2025, outperforming other types of listed banks.

From 2023 to 2025, ICBC's stock rose by 117%, and CCB's increased by 98%, both ranking among the top performers.

On August 6, 2025, ICBC's stock closed at a high, with its market capitalization rising significantly. Over two months later, its price-to-book (PB) ratio briefly exceeded 1, breaking a seven-year streak of trading below book value.

The PB ratio compares a company's stock price to its net asset value per share. A PB of 1 indicates that each unit of investment corresponds to one unit of net assets. A prolonged PB below 1 may suggest the market values the bank's net assets at a discount.

In early 2026, major ETFs experienced rapid net outflows, and banks, especially state-owned ones, faced significant selling pressure due to their high weightings in major indices. However, by March 2026, state-owned bank stocks rebounded, with the four major banks gaining between 7% and 10% from early March to April 3.

As of April 3, 2026, the PB ratios of ICBC and CCB had declined from previous highs but remained relatively strong at 0.69 and 0.71, respectively.

**The "Return" of State-Owned Banks**

Scale is a core indicator of a financial institution's size, influence, and operational capacity.

By the end of 2025, ICBC's total assets exceeded 53.48 trillion yuan, a year-on-year increase of over 9%, making it the first bank globally to surpass 50 trillion yuan. CCB's asset growth also exceeded 12%, reaching over 45 trillion yuan.

From the end of 2023 to the end of 2025, ICBC and CCB increased their asset sizes by nearly 9 trillion yuan and over 7 trillion yuan, respectively. This contrasts with many joint-stock banks, which saw total asset growth of below 10% during the same period.

In recent years, China's banking sector has trended toward the dominance of state-owned banks. The Central Financial Work Conference in October 2023 emphasized improving institutional positioning, supporting large state-owned financial institutions to strengthen, and enhancing their role as mainstays of the real economy and pillars of financial stability.

In terms of revenue and profitability, the major state-owned banks achieved year-on-year growth, demonstrating strong operational resilience. In 2025, they collectively reported revenue of 2.98 trillion yuan and net profit of 1.24 trillion yuan.

ICBC led with a net profit growth rate of 3.18% in 2025, marking the sixth consecutive year of leading comparable peers.

Capital is essential for banks to withstand risks, maintain operations, and achieve development. For state-owned banks, capital can be supplemented through state fiscal measures. In 2025, several major banks completed their first round of capital injections, raising a total of 520 billion yuan, with the Ministry of Finance contributing 500 billion yuan.

The 2026 Government Work Report proposed issuing 300 billion yuan in special government bonds to support capital replenishment for large state-owned commercial banks, marking the start of a second round of capital supplementation.

Analysts expect capital supplementation plans for the remaining two major banks to advance soon, with larger allocations for banks with greater capital needs. Pricing is expected to remain between market price and 1 times PB. In the long term, replenishing core tier-one capital will enhance risk resilience, lending capacity, and sustainable growth.

State-owned banks also perform well in dividends, maintaining stable payout ratios of 30% or higher. For example, ICBC has distributed cumulative cash dividends of 1.58 trillion yuan since its listing in 2006, ranking first in total A-share dividends. From 2023 to 2025, its average dividend yields for A-shares and H-shares were 5.22% and 7.29%, respectively.

These returns far exceed those of comparable investment products and wealth management products. In 2025, wealth management products generated 730.3 billion yuan in investor returns, with an average yield of 1.98%, down 67 basis points from 2024 and falling below 2% for the first time.

**Comprehensive Operations and Technology-Driven Future**

For years, China's banking sector relied on loose monetary policy, stable interest spreads, and strong credit demand to achieve sustained high growth. However, with the advent of a low-interest-rate era, the industry faces restructuring.

Some industry experts express less concern about asset quality and more about banks' ability to maintain profit growth in the new economic environment. Data shows that the non-performing loan ratio for commercial banks fell to 1.50% in the fourth quarter of 2025, with the major state-owned banks maintaining ratios of 1.31% or lower.

Technology is a key factor influencing bank competitiveness. In 2025, ICBC invested 28.588 billion yuan in fintech, while CCB allocated 26.722 billion yuan, accounting for 3.51% of its revenue.

In terms of net interest margins, by the end of 2025, ICBC's margin was 1.28%, down 14 basis points, while CCB's stood at 1.34%, with a narrowed annual decline. Despite some signs of stabilization, the traditional reliance on interest spreads is unsustainable in the long run. Banks transitioning to comprehensive income models are likely to lead the next phase.

Several bank managements have emphasized providing full-chain, full-cycle comprehensive services. For instance, ICBC aims to leverage its full license advantages and collaborate deeply with government agencies, research institutions, and other financial players to meet diverse client needs.

The President of ICBC highlighted expanding comprehensive services, with non-commercial banking playing a key role. Priorities include supporting modern industrial systems, technological innovation, green transformation, and regional coordination through integrated commercial, investment, and asset management services.

Another expert emphasized shifting from product-oriented to client-oriented approaches, upgrading from selling financial products to providing holistic solutions and customized services. Deep integration into client value chains and shared growth are essential for long-term value creation.

Internationally leading banks benefit from diversified profit models and dominant positions in product development, risk control, and trading. Their sustained excess returns are reflected in stock prices, built over decades of innovation.

Analysts note that state-owned banks are increasingly demonstrating unique strategic positions and medium- to long-term investment value. Driven by industrial upgrading and fintech advancements, these banks hold unparalleled advantages in comprehensiveness, internationalization, and digitalization. Their high dividends and low volatility appeal to both individual and institutional investors.

In recent years, insurance funds have frequently increased stakes in banks, with dozens of such moves in 2025 alone. Policymakers are exploring insurance capital participation in bank capital supplementation, promising mutual benefits and expanded collaboration.

In the long term, focusing on the enduring value of state-owned banks remains a optimal choice for low-risk偏好 capital. Short-term strategies should account for economic downturns, credit contraction, and risk events, emphasizing tactical positioning and risk control.