It's that time of year again for mid-year dividends in the A-share market. Against a backdrop of heightened market volatility and persistently low risk-free interest rates, the high dividend yields of bank stocks have once again captured investor attention.
Data shows that, based on closing prices as of June 22nd, 16 out of 42 A-share listed banks offer a dividend yield exceeding 5%. Among these, Hua Xia Bank and Industrial Bank Co., Ltd. stand out with yields surpassing 6%, making them the only two listed banks in the A-share market to achieve this level.
In terms of bank types, joint-stock commercial banks constitute a significant portion of the list, with seven national joint-stock banks making the cut. Four city commercial banks and four rural commercial banks are also included.
This also indicates that currently, no state-owned major banks have a dividend yield above 5%. As of the June 22nd close, Bank of Communications had the highest yield among this group at 4.85%, followed by Postal Savings Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China.
Specifically, Hua Xia Bank and Industrial Bank Co., Ltd. rank first and second, respectively, as the only two with yields over 6%. Their stock prices closed at specific levels on June 22nd with notable daily gains, resulting in dividend yields of 6.23% and 6.01%.
Four banks offer yields exceeding 5.5%, consisting of two leading joint-stock banks and two city commercial banks.
The largest group comprises ten banks with yields between 5% and 5.5%.
However, for most high-yield banks like Hua Xia Bank and Industrial Bank Co., Ltd., the elevated yields are primarily a result of overall sector valuation pressure. Since 2025, funds have flowed out of traditional blue-chip sectors like banking into growth-oriented tech stocks, keeping bank share prices low and valuations suppressed.
Conversely, some banks have achieved higher yields by increasing their dividend payout ratios. In the 2025 fiscal year, several banks, including China CITIC Bank, China Minsheng Bank, and Bank of Shanghai, raised their payout ratios to varying degrees. For instance, China CITIC Bank increased its ratio, and Bank of Shanghai has steadily raised its cash dividend payout ratio over consecutive years, directly boosting its dividend yield.
What does a 5% yield mean for investors? With the 10-year government bond yield at just 1.76%, bank stock yields are approximately three times the risk-free rate, presenting them as attractive options for investors seeking stable cash flow.
It is worth noting that the valuation levels of many bank stocks remain at historical lows. As of June 22nd, the price-to-book ratio for a key bank index was notably low. The bank with the highest yield, Hua Xia Bank, trades at a particularly low P/B ratio, indicating its share price is roughly one-third of its net assets per share and suggesting significant potential for valuation recovery.
Simultaneously, the fundamental performance of the banking sector is showing marginal improvement. In the first quarter of 2026, the 42 listed banks collectively reported a net profit increase. The industry's average net interest margin held steady, and several banks halted a multi-year declining trend, showing initial signs of recovery from downward pressure.
Nevertheless, while focusing on high dividends, investors must remain rational and cautious. A high yield does not guarantee high total returns, and the risks associated with share price volatility cannot be ignored. Looking ahead to the second half of 2026, several securities firms project that the overall net profit growth rate for listed banks in 2026 will be within a specific range, representing a significant improvement from 2025. This improvement in fundamentals is expected to provide strong support for the valuation recovery of bank stocks.
Comments