In "Major Banks," China International Capital Corporation: The preferred H-shares of domestic banks are ICBC, with over 50 trillion RMB deposits being repriced to alleviate net interest margin pressure

Bank of China International published a research report, maintaining an "Overweight" rating on the H-shares of domestic banks, and listed specific recommendations, with a preference for Industrial and Commercial Bank of China (01398.HK), believing its valuation is relatively attractive among peers; it also recommends buying Agricultural Bank of China (01288.HK), China Merchants Bank (03968.HK), China Construction Bank (00939.HK), Postal Savings Bank of China (01658.HK), and China Everbright Bank (06818.HK).

Bank of China International predicts that as over 50 trillion yuan (the same below) of long-term fixed deposits will mature in 2026, the banking sector's liability costs are expected to enter a repricing window, which will significantly alleviate the net interest margin pressure that has plagued the industry in recent years.

According to data from the People's Bank of China, as of the end of June 2025, the total amount of RMB deposits in mainland China reached 320.17 trillion yuan. The proportion of deposits with a maturity of one to five years at the four major state-owned commercial banks fell from a high of 24.5% at the end of 2024 to 23.5%, indicating initial signs of improvement in the deposit structure.

The report estimates through a reverse calculation model that in 2026, the four major banks will have 20.37 trillion yuan of long-term deposits maturing, an increase of 2.03 trillion yuan compared to 18.34 trillion yuan in 2025. If we estimate based on the four major banks accounting for about 40% of the total national deposits, the nationwide long-term fixed deposit maturity scale in 2026 will reach 50.93 trillion yuan, an increase of 5.08 trillion yuan compared to 2025.

2026 will open the largest liability repricing window in the history of the banking industry, the report emphasizes, which will not only slow down the decline in net interest margins but also create conditions for the recovery of bank profitability. Despite facing margin pressure, the report believes that the fundamentals of the banking industry will remain robust in 2026. The commercial banks covered by Bank of China International are expected to achieve a slight year-on-year increase in net profit attributable to shareholders in 2025, with growth expected to rise to about 2% in 2026