On October 29, major A-share indices broadly declined, yet the banking sector moved against the trend. Regional city commercial banks such as Bank of Qingdao and Bank of Chengdu led the gains, with Bank of Qingdao closing at 6.33 yuan per share, up more than 8%. Large banks also extended their rally, with ICBC and CCB both refreshing historic highs, while Agricultural Bank of China, Bank of Communications, and Postal Savings Bank of China also touched new yearly highs during intraday trading.
On the news front, Fitch recently upgraded the viability ratings of six major banks, and interim dividend payouts for A-share banks are currently underway, with the six major banks' combined dividends set to exceed 220 billion yuan, accounting for more than 80% of the total among the 23 banks that have disclosed interim dividend plans so far. Since the second half of the year, the banking sector has reversed its sluggish first-half performance, with the Shenwan banking index recovering its earlier losses and continuing to push higher. As A-share banks gradually release their third-quarter reports, the market is turning more attention to this dividend asset. What lies ahead for bank stocks?
On October 29, the A-share banking sector rose against the broader market, with the Shenwan banking index posting the second-largest gain among the 31 Shenwan first-tier industry indices. Large banks continued their upward trend, with ICBC and CCB shares touching 8.78 yuan and 12.08 yuan per share respectively during intraday trading, both hitting record highs. Agricultural Bank of China, Bank of Communications, and Postal Savings Bank of China also reached new yearly highs intraday, touching 7.57 yuan, 8.58 yuan, and 5.75 yuan per share respectively.
All six major banks generally closed higher. Bank of Communications closed at 8.56 yuan per share, up 3.63%; ICBC closed at 8.78 yuan per share, up 2.57%; CCB closed at 12.04 yuan per share, up 2.29%; Bank of China closed at 7.16 yuan per share, up 1.99%; Agricultural Bank of China closed at 7.56 yuan per share, up 1.75%; and Postal Savings Bank of China closed at 5.74 yuan per share, up 1.59%.
China Construction Bank Corporation (ASX: 601939) shares, amid their recent sustained upward momentum, saw their total market value surpass ICBC to claim the top spot among A-share listed companies. The combined market value of the "Big Four" state-owned banks — ICBC, Agricultural Bank of China, Bank of China, and CCB — exceeded 10 trillion yuan for the first time today. Among them, CCB stood at 3.15 trillion yuan, ICBC at 3.13 trillion yuan, Agricultural Bank of China at 2.65 trillion yuan, and Bank of China at 2.31 trillion yuan.
Wu Zewei, a special researcher at Suzhou Bank, said in an interview that the successive record highs in large bank share prices are the result of multiple factors working together, including fundamentals, capital flows, and market style. The pace of decline in the industry's net interest margin is gradually slowing, downward pressure on profitability has eased, and asset quality has remained broadly stable, significantly cooling market concerns about continuously weakening bank earnings.
"State-owned major banks continue to maintain stable dividend payout ratios, and their high dividend yields are highly attractive in a low-interest-rate environment. As overall market risk appetite has declined, capital has been flowing out of high-volatility growth sectors, making stable dividend assets the preferred safe haven. Combined with the sector's long-standing deep below-net-asset valuation, there is ample room for valuation repair, and long-term funds continue to enter and increase holdings, further driving up state-owned major bank share prices," Wu Zewei told reporters.
According to a review by reporters, 23 A-share banks have so far disclosed their 2026 interim dividend plans, with total dividend payouts set to exceed 270 billion yuan. Among them, the six major banks' combined dividends amount to approximately 221 billion yuan, accounting for more than 80% of the total disclosed dividends, and all six major banks have raised their payout ratios from 30% last year to 31%. ICBC and Agricultural Bank of China have already completed their interim dividend distributions this month.
Against the backdrop of continuously declining deposit rates and narrowing yields on low-risk wealth management products, the appeal of bank dividend yields is becoming increasingly prominent. iFinD data shows that based on the latest share prices, all six major banks have dividend yields above 3%.
Additionally, on the news front, Fitch Ratings recently upgraded the viability ratings (VR) of six major banks. ICBC, Agricultural Bank of China, CCB, and Bank of China were upgraded to "bbb+", Postal Savings Bank of China to "bbb", and Bank of Communications to "bbb-". According to Fitch's Rating Definitions, the viability rating (VR) measures a bank's intrinsic credit quality. Fitch stated in several bank rating reports that the viability rating reflects the bank's business profile strengths, which support its credit resilience through cycles, as well as the continued improvement in China's banking operating environment.
In the first half of this year, the A-share banking sector performed weakly, with the Shenwan banking index falling about 12% cumulatively. Since entering the second half, however, the sector has shown clear signs of recovery, with the Shenwan banking index advancing repeatedly, not only recovering lost ground but also hitting new yearly highs on multiple occasions.
While large banks continue their "elephant dance," some regional city commercial banks have also performed notably well. During today's intraday trading, Bank of Qingdao and Bank of Chengdu led gains among bank stocks. As of market close, Bank of Qingdao closed at 6.33 yuan per share, up more than 8%; Bank of Chengdu closed at 19.9 yuan per share, up 6.08%. Over a longer time frame, Bank of Qingdao and Bank of Chengdu have posted year-to-date gains of 45.91% and 33.02% respectively, ranking among the top A-share banks, followed closely by CCB, which has repeatedly hit new highs recently and has gained more than 30% year-to-date, reaching 32.42%.
"The banking sector has staged a sustained recovery in the second half of the year, and the overall upward trend still has support, but there will be clear divergence within the sector," Wu Zewei told reporters.
He further explained that in the medium to long term, the stabilization of net interest margins and the normalization of dividend policies will continue to solidify the dividend allocation value of bank stocks, and the sector's valuation still has room for repair. Short-term performance will be affected by market style rotation; once market risk appetite recovers, capital will flow back toward growth sectors, and the pace of gains in the banking sector will slow somewhat. State-owned major banks have stronger operational stability, and their share price movements will be more steady. Regional city commercial banks, relying on local credit demand, have greater earnings elasticity and are more likely to produce periodic rallies. Overall, the sector is unlikely to see a broad-based rally, and structural opportunities will become the mainstream of future performance.
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