JPMorgan released a research report indicating that Chinese banks' first-quarter 2026 results showed a marked improvement in revenue growth, increasing by 7% year-on-year. This represents an acceleration from the 2% growth recorded in the fourth quarter of 2025, primarily driven by a steady recovery in net interest income. A key positive surprise was the quarter-on-quarter rebound in net interest margin. Profit growth improved more moderately, as banks began rebuilding their provision buffers. The report noted significant divergence in performance among banks during the first quarter, with the four major state-owned banks clearly outperforming their peers. In contrast, all joint-stock banks reported profits below JPMorgan's expectations. Following the Q1 results, the firm's top picks among Chinese banks are Agricultural Bank of China (01288), China Construction Bank (00939), Bank of China (03988), Industrial and Commercial Bank of China (01398), and Bank of Ningbo (002142.SZ). JPMorgan believes Postal Savings Bank of China (01658) may continue to lag behind the major state-owned banks. The firm also expects joint-stock banks as a group to underperform state-owned banks. Among them, China Everbright Bank (06818), China Minsheng Bank (01988), and Huaxia Bank (600015.SH) could face significant stock price pressure due to profit contraction in the first quarter. Shanghai Pudong Development Bank (600000.SH) and China Merchants Bank (03968) may also deliver weak near-term performance, as SPDB experienced a sharp slowdown in profit growth, and while CMB holds a valuation premium, its profit growth still trails that of the major state-owned banks.
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