---
title: "Zhongtai Securities: The dividend attributes of bank stocks are prominent, focusing on two investment main lines"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/238805646.md"
description: "Zhongtai Securities released a research report stating that under the background of \"reciprocal tariffs,\" the dividend attributes of bank stocks have become increasingly apparent. It is recommended to pay attention to the investment value of large banks, China Merchants Bank, and high-quality urban and rural commercial banks. The report mentioned that although the upward trend in government bond yields in the first quarter faces changes, the high dividend cost-effectiveness of the banking sector has improved. Investment recommendations include focusing on high-dividend large banks and urban and rural commercial banks with location advantages. Overall, the banking industry's performance is stable, and profit growth is controllable"
datetime: "2025-05-05T23:28:03.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/238805646.md)
  - [en](https://longbridge.com/en/news/238805646.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/238805646.md)
---

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# Zhongtai Securities: The dividend attributes of bank stocks are prominent, focusing on two investment main lines

According to the Zhitong Finance APP, Zhongtai Securities released a research report stating that under the background of "reciprocal tariffs," the dividend attributes of bank stocks are highlighted. It is recommended to actively pay attention to the investment value of bank stocks, focusing on large banks, China Merchants Bank, and high-quality urban and rural commercial banks. The trend of rising government bond yields in the first quarter faces marginal changes, and the cost-effectiveness of high-dividend bank stocks has improved. There are two investment mainlines: one is large banks with high dividends; the other is urban and rural commercial banks with location advantages and strong certainty.

**Key Points:**

**Overview and Outlook of Financial Reports from 42 Listed Banks**

1.  Marginal slowdown in revenue: Year-on-year -1.8%, with interest margin and other non-interest items being drag factors, while scale growth and fees are support items. State-owned banks and urban rural commercial banks saw year-on-year changes of -1.5%, -4%, +3.1%, and +0.2%, respectively, with marginal declines in growth rates.
    
2.  Marginal slowdown in net profit: Year-on-year -1.2%, with negative growth. State-owned banks and urban rural commercial banks saw year-on-year changes of -2.1%, -2.1%, +5.6%, and +4.8%.
    
3.  Asset quality and expenses remain stable: The industry's annualized non-performing loan generation rate for Q1 2025 is 0.64%, down 9 basis points quarter-on-quarter, up 2 basis points year-on-year, with a marginal improvement in the upward trend of non-performing loan generation. Business and management expenses for Q1 2025 are down 1.1% year-on-year (vs. +1.2% year-on-year in 2024), with marginal improvement in year-on-year growth rates.
    
4.  Full-year performance outlook: After repricing, the pressure on large banks' interest margins will ease subsequently; urban rural commercial banks have considerable OCI reserves, the pressure on bank income is controllable, asset quality can remain stable, and profit growth can also remain stable.
    
5.  Investment recommendation: After tariff challenges, we continue to emphasize the stability of the banking sector. We remain optimistic about the stability of bank performance and the sustainability of the investment returns it brings.
    

**Profit Driving Factors Breakdown: Interest margin and fee contributions have marginally expanded, while other non-interest and scale support have declined.**

Marginal changes in revenue driving factors across sectors: Large banks face pressure on volume and price, but non-interest drag is small; other sectors have small volume and price pressure but significant non-interest drag. 1. State-owned banks: The marginal narrowing of scale contribution is the largest, the marginal improvement of net interest margin contribution is the smallest, and the marginal narrowing of other non-interest contribution is the smallest among sectors. 2. Joint-stock banks: The marginal improvement of net interest margin contribution is the largest, while the marginal narrowing of other non-interest contribution is relatively large among sectors. 3. Urban commercial banks: The marginal improvement of net fee contribution is the largest, while the marginal narrowing of other non-interest contribution is the largest among sectors. 4. Rural commercial banks: The marginal improvement of net interest margin contribution is relatively large, while the marginal narrowing of other non-interest contribution is relatively large.

**Detailed Breakdown of Interest Income: State-owned banks face slight short-term pressure on volume and price, while other sectors show marginal improvement in growth rates, with urban commercial banks and joint-stock banks showing the most resilience in interest margins and asset growth.**

Net interest income for large banks, joint-stock banks, urban commercial banks, and rural commercial banks decreased year-on-year by -3.4%, -0.5%, +8.3%, and -0.9%, respectively. From a year-on-year and quarter-on-quarter breakdown, the declines in the 1-year and 5-year LPR in 2024 are the largest in the past four years. State-owned banks have a high proportion of public medium- and long-term loans and mortgages, facing the greatest repricing pressure in Q1. Coupled with a slight slowdown in the year-on-year growth rate of interest-earning assets, state-owned banks face short-term pressure on volume and price, resulting in the weakest performance in interest income growth. In contrast, urban commercial banks and joint-stock banks performed well in terms of interest margins (urban commercial banks' interest margin narrowed by only 8 basis points year-on-year and 1 basis point quarter-on-quarter, while joint-stock banks' interest margin narrowed by only 8 basis points year-on-year and 2 basis points quarter-on-quarter), along with an increase in the year-on-year growth rate of interest-earning assets, significantly improving the growth rate of net interest income for urban and joint-stock banks **Detailed Breakdown of Non-Interest Income: Year-on-Year -2.1%; Significant Narrowing of Fee Decline; Strong Resilience in Other Non-Interest Income of Major Banks, Significant Pressure on City and Rural Commercial Banks in Q1 but OCI Floating Profit is Most Abundant.**

1.  Other non-interest income dragged the overall non-interest income growth of the industry from positive to negative; major banks showed strong resilience in other non-interest income, with year-on-year non-interest income for major banks, joint-stock banks, city commercial banks, and rural commercial banks at +4.5%, -10.7%, -7.2%, and 3.3% respectively. 2. The growth rate of industry fees has significantly improved; city commercial banks showed the largest improvement, followed by joint-stock banks. 3. Net other non-interest income: major banks showed strong resilience; city and rural commercial banks face significant short-term pressure, but OCI floating profit reserves are the most abundant.

**Asset Quality Split Analysis: Time for Space, Continued Stability.**

The industry’s annualized non-performing loan generation rate for Q1 2025 is 0.64%, down 9 basis points quarter-on-quarter, up 2 basis points year-on-year, with a marginal improvement in the upward trend of non-performing loan generation. The non-performing loan ratio decreased by 1 basis point to 1.23% quarter-on-quarter, continuing a trend of steady decline. By the end of 2024, the proportion of loans under watch decreased by 1 basis point to 1.71% compared to the first half of 2024, indicating controllable future non-performing loan pressure for the industry. The provision coverage ratio for Q1 2025 decreased by 2.08 percentage points to 237.99% quarter-on-quarter. The loan-to-deposit ratio decreased by 4 basis points to 2.94% quarter-on-quarter. By industry: the non-performing loan ratio for retail loans in 2024 increased by 11 basis points to 1.15% quarter-on-quarter, with major banks increasing by 18 basis points, the largest increase, mainly due to operational loans (up 24 basis points to 1.54% quarter-on-quarter). The non-performing loan ratio for corporate loans decreased by 7 basis points to 1.54% quarter-on-quarter, with major banks decreasing by 8 basis points, showing the largest improvement.

**Others:**

In terms of expenses, business and management fees for Q1 2025 decreased by 1.1% year-on-year (vs 2024 year-on-year +1.2%), with marginal improvement in year-on-year growth; the cost-to-income ratio for Q1 2025 is 27.7%, a slight increase of 0.2 percentage points year-on-year.

In terms of capital, the core Tier 1 capital adequacy ratio for the industry in Q1 2025 decreased by 24 basis points to 11.38%; the growth rate of risk-weighted assets in Q1 2025 increased by 0.7 percentage points year-on-year to 6.5%.

Regarding convertible bonds, there are currently 10 convertible bonds in existence for listed banks, with bank stocks close to the strong redemption price being Hangzhou Bank (0.4%), Nanjing Bank (2.6%), and Qilu Bank (9.2%).

In terms of dividends, the average dividend payout ratio for listed banks in 2024 is 26.1%, an increase of 0.7 percentage points compared to 2023, with the top five stocks showing the largest increase being Xi'an, Ningbo, Shanghai Agricultural, CITIC, and Hangzhou.

In terms of dividend yield, based on the closing price on April 30, 2025, there are a total of 14 companies with a static dividend yield exceeding 5% in 2024, accounting for one-third of the 42 listed banks.

**Outlook: After repricing, the interest margin pressure on major banks will ease; city and rural commercial banks have considerable OCI reserves, and overall non-interest pressure for the year is controllable.**

1.  Scale: Local government bond issuance remains high, and mortgage growth stabilizes; high-quality regional small and medium-sized banks are still expected to maintain high growth. On the corporate side: the issuance volume and net financing amount of local government bonds have maintained high growth year-on-year since the second half of last year, with an issuance scale of 2.8 trillion in the first quarter of this year, up 81% year-on-year. The issuance scale in April was 693.3 billion, up 102% year-on-year, which will drive physical workload. On the retail side: mortgage loan growth is expected to stabilize, with a net increase of 1.55 trillion in medium to long-term loans for residents from September last year to March 2025, an increase of 117.1 billion year-on-year; In the fourth quarter of 2024, the single-quarter residential mortgage loans reversed the downward trend, achieving a net increase of 120 billion, the highest in the past six quarters. Only in Q1 2024 was there a net increase of 20 billion, while other quarters showed a downward trend.
    
2.  Interest Margin: Both public and private loan pricing set a bottom line + liability support, and it is expected that the decline in interest margin will be smaller than last year; after repricing in Q1, the pressure on large banks has eased. The after-tax interest rate on public loans must not be lower than the same-term government bonds; the retail consumer loan interest rate must not be lower than about 3%. The liability side is expected to continue to release, with the marginal changes in the annualized cost of interest-bearing liabilities for listed banks over the past five quarters (Q1 2024 - Q1 2025) being -4, -7, -6, -7, -15bp respectively, with the decline in Q1 2025 being the largest in the past five quarters. Entering 2025, it is expected that many high-priced fixed-term deposits from the past few years will mature this year, leading to replacements, and the pricing & structure optimization on the deposit side will continue to support the interest margin.
    
3.  Fee Income: The impact of fee reductions is fading; the three-phase fee reduction for public offerings is expected to have a small impact; fee income is entering a normal growth trend. The base effect of fee reductions is fading, combined with the recovery of the capital market, fee income is returning to normal growth. It is estimated that the agency distribution of funds by listed banks accounts for about 3% of fee income, and about 0.5% of total revenue. Therefore, the three-phase fee reduction for public offerings will have a small impact.
    
4.  Other Non-Interest Income: Q1 is under pressure, but the OCI floating profit reserves of urban and rural commercial banks are considerable, and the pressure on other non-interest income for the whole year is controllable. It is expected that the long-term central tendency of the bond market will decline, but short- to medium-term volatility will increase. Through calculations, the average proportion of other comprehensive income to net profit for listed banks in Q1 2025 is 15.7%, with large banks, joint-stock banks, urban commercial banks, and rural commercial banks being 15.7%, 12.5%, 20.8%, and 26.6% respectively. Overall reserves are still considerable, with urban and rural commercial banks having the thickest reserves, and the pressure on other non-interest income for the whole year is expected to be controllable

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