Orient: Listed banks improve their performance, and the banking sector is expected to return to a fundamental narrative in 2026.

Orient released a research report stating that the performance growth of A-share listed banks continued to improve, with net interest income growth generally rebounding. In the first year of the 15th Five-Year Plan, asset expansion remains resilient under the support of policy financial instruments; it is still in the cycle of concentrated deposit repricing, supporting the stabilization and rise of net interest margins; structural risks are still expected to be supported by policy intervention. In 2026, the insurance industry will systematically implement I9, and the medium-to-long-term guiding effects of the new regulations for public fund assessments are expected to be evident, with the bank sector expected to have absolute returns in 2026. At present, two investment themes are being focused on: high-quality small and medium-sized banks with confirmed fundamentals, and state-owned large banks with stable fundamentals and good defensive value. Orient's main views are as follows: Performance growth continues to improve, with net interest income growth on the rise As of the end of 2025, the revenue, pre-provision profit, and net profit attributable to the parent company of 22 A-share listed banks increased by 1.2%, 0.6%, and 1.3%, respectively, compared to an increase of 0.6 percentage points, 0.4 percentage points, and 0.4 percentage points from Q3 2025. Breaking it down, against the backdrop of a stabilizing interest rate differential, net interest income growth improved by 0.6 percentage points on a quarter-on-quarter basis; with the increased activity in the capital market, agency and wealth management businesses have seen a slight resurgence, with net fee income growth improving by 1.4 percentage points quarter-on-quarter; net other non-interest income maintains a high degree of contribution, with growth remaining stable quarter-on-quarter (mainly due to continued high growth in state-owned banks).