<div id="readability-page-1"><div>UBS published a research report noting that mainland Chinese banks delivered strong results in the first quarter, with state-owned banks significantly beating expectations in both revenue and earnings. The six major state-owned banks recorded an average revenue growth of 8.5%, the fastest pace since 2021 and well above UBS's forecast of 4.6%. The bank said the revenue beat was mainly driven by a better-than-expected rebound in NIM, resilient fee income and a low base for trading income at certain banks. Despite higher provisioning offsetting part of the strong performance, average earnings growth reached 3.4%, still above UBS's forecast of 1.7%.The report indicated that the four largest state-owned banks were clear winners, while joint-stock banks showed more mixed performance and generally fell short of market expectations. UBS said NIM of the large state-owned banks rebounded by an average of 4 bps QoQ in the first quarter, mainly benefiting from repricing of time deposits upon maturity, particularly three-year time deposits, which led to a 3% QoQ decline in interest expenses across its coverage. Although most banks acknowledged that NIM still faces mild pressure, the YoY decline is expected to narrow further. Fee income continued its recovery trend, generally posting mid- to high-single-digit growth, with wealth management fees remaining the key growth driver.UBS reiterated its preference for defensive, high-dividend mainland bank stocks, favoring CCB (00939.HK) +0.080 (+0.911%) Short selling $166.39M; Ratio 36.927% , BANK OF CHINA (03988.HK) +0.040 (+0.791%) Short selling $73.78M; Ratio 24.533% , ICBC (01398.HK) +0.094 (+1.375%) Short selling $118.93M; Ratio 30.616% , CITIC BANK (00998.HK) -0.080 (-0.976%) Short selling $3.44M; Ratio 9.293% and BANK OF NINGBO (002142.SZ) -0.350 (-1.043%) . The broker cautioned that signs of accelerating deterioration in retail loan asset quality have emerged, with overdue loan ratios rising at several banks and credit card loan asset quality generally weakening. It expects pressure on retail asset quality to remain a headwind, potentially leading to continued divergence in provisioning and earnings growth between large state-owned banks and joint-stock banks. (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-04 12:25.) (A Shares quote is delayed for at least 15 mins.)</div>This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation.</div>

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UBS's report highlights that mainland Chinese banks, particularly state-owned ones, exceeded expectations in Q1, with an average revenue growth of 8.5%. This growth was driven by a rebound in net interest margin (NIM), resilient fee income, and a low trading income base. Despite higher provisioning, earnings grew by 3.4%. UBS favors defensive, high-dividend bank stocks like CCB and ICBC, but warns of deteriorating retail loan asset quality, which may affect earnings growth differently between large state-owned and joint-stock banks.

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UBS: Mainland Banks' 1Q Results Generally Beat; NIM Rebounds; State-owned Big Banks Outperform