Citigroup has released a research report forecasting that the covered Chinese banks will see a 6.3% year-on-year increase in revenue for the first quarter of this year. This represents an acceleration compared to the 3% growth in the fourth quarter of 2025 and the 1.5% growth for the full year 2025. The improved performance is primarily supported by robust credit growth driven by government-related lending, easing pressure on net interest margins, strong fee income growth from wealth management services, and a lower base for trading gains compared to the same period last year. The report suggests that banks may utilize the strong revenue growth to increase provisions, resulting in a slower profit growth rate of 3.1% year-on-year for the first quarter. Large state-owned banks and regional banks are expected to outperform joint-stock banks due to better loan growth and net interest margin trends. Among the large banks, Agricultural Bank of China (ABC), China Construction Bank (CCB), and Bank of China are anticipated to deliver relatively stronger results. Conversely, Citigroup identifies China Merchants Bank (CM BANK), Industrial Bank, Shanghai Pudong Development Bank, China Minsheng Bank, and China Everbright Bank (CEB BANK) as potentially disappointing performers in the first quarter. The institution has initiated a 30-day positive catalyst watch on the H-shares and A-shares of ABC and CCB, as well as on Bank of Ningbo. For H-shares, Citigroup's top picks are Bank of China, China Construction Bank, and Chongqing Rural Commercial Bank (CQRC BANK).
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