Orient: It is expected that the growth rate of bank profits in the third quarter of 2025 will be stable, with possible exacerbation of differentiation between sectors.

Orient released a research report, stating that according to calculations, the lowering of the 25Q2LPR and the deposit benchmark interest rate have a neutral to slightly positive impact on the net interest margin of banks for the year, while the promotion of anti-internal competition has a suppressive effect on loan growth but may also have a positive effect on the reasonable pricing of related loans. Therefore, it is expected that the interest rates of newly issued loans during this period will remain relatively strong, providing support for the net interest margin. The increased external uncertainties, the temporary decline in market risk appetite, the increase in dividend allocation demand as the insurance industry enters the peak season, and the opportunities brought about by institutions seeking profit realization may lead to a favorable outlook for the relative returns of the banking sector in 25Q4. Key points from Orient's analysis include: - The net interest margin is expected to stabilize, supporting stable interest net income performance. - Loan growth in 25Q3 is still under pressure, with financial investments remaining an important driver of asset expansion. It is predicted that the loan growth of listed A-share banks in 25Q3 will decrease slightly by 0.03 percentage points compared to 25H1, with state-owned banks showing relative resilience and city commercial banks experiencing a greater decline. Government bond issuance in 25Q3 is slightly slowing down, but financial investments continue to play a key role in driving asset expansion for banks. It is expected that financial investments by listed banks in 25Q3 will increase by 1.9 percentage points compared to 25H1. - Non-interest income performance may vary, with state-owned banks potentially performing better. - Asset quality is expected to remain robust, with credit costs likely to return to a downward trend. Investment recommendations focus on quality small and medium-sized banks with solid fundamentals and state-owned large banks with good defensive value. Risks include unexpected tightening of monetary policy, unexpected fiscal policy changes, and changes in assumptions affecting the calculation results.