China Galaxy Securities released a research report stating that listed banks are expected to see a strong start in credit issuance, with the corporate sector likely continuing to drive steady full-year credit growth. The central bank's stance on stabilizing net interest margins remains unchanged, leaving room for further reserve requirement ratio (RRR) and interest rate cuts; optimization of liability costs is expected to alleviate pressure on banks' interest margins. The market is watching the effectiveness of policies aimed at expanding domestic demand, stabilizing growth and expectations, and de-risking key sectors. Driven by factors including liquidity conditions and the low-interest-rate environment, the banking sector's current dividend attributes are expected to persist. Long-term funds, represented by insurance capital, continue to increase their holdings, accelerating the improvement of pricing efficiency and the re-rating of valuations. The firm maintains its positive outlook on the banking sector's dividend value and a recommended rating.
The corporate loan segment is expected to continue supporting a strong credit start, with full-year credit increment forecast to be steady and front-loaded. The firm estimates that RMB-denominated loans under the total social financing (TSF)口径 will increase by approximately 5.5-5.6 trillion yuan in January 2026, a year-on-year increase of about 300 billion yuan, while RMB loans from financial institutions are projected to rise by about 5.3-5.4 trillion yuan, up roughly 250 billion year-on-year. Specifically, corporate loans are anticipated to perform slightly better than the same period last year, primarily due to: first, the later timing of the Spring Festival increasing the number of working days and front-loading the credit placement节奏; second, proactive fiscal policy leading to relatively充足 project reserves, with marginal recovery expected in supporting credit demand—current local government bond issuance plans for January show a higher planned issuance volume than last year; third, the continued leveraging effect on credit from instruments like the 500 billion yuan in new policy-oriented financial tools, which the firm calculates could theoretically support a maximum credit increment of about 5.6-5.95 trillion yuan, expected to be gradually released in 2026 and subsequent years.
Regarding the retail sector, considering the current real estate market remains in a bottoming-out phase and household consumption demand is still weak, retail credit growth may continue to face some pressure. For the full year, with policies promoting consumption and expanding investment remaining forceful, and structural monetary policy tools seeing interest rate cuts and expanded scope, credit increment is expected to be largely flat with last year, though growth rate may slightly decline. The corporate business will remain the ballast, with credit allocation continuing to tilt towards key areas such as technological innovation, consumption, and the "five major articles."
The pace of net interest margin (NIM) compression is expected to narrow, with liability cost optimization being the primary support. The continuation of moderately accommodative monetary policy, coupled with the central bank's announced structural rate cuts and unchanged stance on stabilizing NIM, alongside remaining room for RRR and interest rate cuts this year, leads the firm to forecast a NIM decline of about 5-10 basis points (BP) for banks in 2026 under the assumption of a 50 BP RRR cut and a 10 BP interest rate cut. On the asset side, repricing and rate cuts bring negative impacts, but simultaneously, the central bank's urging for banks to set new loan rates not lower than comparable government bond yields and self-discipline on rates in certain retail segments will help mitigate pressure on the decline of asset yields. On the liability side, as high-cost deposits mature and are repriced, and deposit structures are optimized, the effects of deposit cost optimization will be further realized. Given the current trend towards shorter-term new deposits, and referencing the maturity structure of listed banks' deposits in H1 2025, the firm estimates approximately 54 trillion yuan in time deposits will mature in 2026, including a significant volume of 3-5 year time deposits due for repricing, which will effectively reduce liability costs. Furthermore, self-discipline on interbank deposit rates will also help lower banks' funding costs.
Asset quality is expected to remain generally stable, while retail non-performing loan risks may continue to be exposed steadily. The asset quality of corporate loans is overall anticipated to continue benefiting from the steady progress of debt resolution. Notably, the recent bond extension events involving Vanke have drawn market attention; currently, the grace periods for two bonds have been extended by 30 days, and the latest extension proposal further clarifies credit enhancement measures. For listed banks, exposure to the real estate sector is low, and provisions are充足; based on loan concentration data from state-owned and joint-stock banks, many banks have no property developers among their top ten single borrowers. A turning point for retail NPL risks still awaits observation, with household income and income expectations being the primary influencing factors. Currently, the policy direction remains focused on stabilizing the real estate market and improving and stabilizing market expectations, while fiscal efforts to promote employment and increase household incomes continue unabated; it is advised to keep monitoring real estate market sales and household income expectations.
Risk warnings include: economic performance falling short of expectations and risks of asset quality deterioration; interest rate declines leading to pressure on NIM; and risks from tariff impacts and weakening demand.
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