Guosen: In the second half of the year, net interest margin will be the ace in the bank's hand, maintaining a dual focus on stable dividends and excellent growth.

Guosen released a research report stating that looking ahead to the second half of the year, the stability resilience of asset-side yield will be the core variable determining the differentiation of net interest margin among listed banks. The differentiation of loan yield will be jointly determined by three factors: "pressure of high-interest matured loans substitution, regional bargaining power, adjustment of high-yield retail proportion." The bank maintains a dual focus on the stable dividend and outstanding growth of the banking industry, with outstanding growth mainly focusing on banks with little pressure on high-interest loan substitution or strong regional bargaining power. Key points of Guosen are as follows: In the second half of 2026, the net interest margin winner will switch to the asset side In the first quarter of 2026, the core DRIVE for the stabilization and improvement of the net interest margin of listed banks is the liability side, with the concentration of high-interest fixed-term deposits maturing driving a significant decrease in deposit costs, completely offsetting the decline in asset-side yield. However, the dividend from the repricing of high-interest deposits will significantly weaken in the second half of the year, with an estimated share of about 50% for high-interest repriced deposits in the first quarter of the year. Looking ahead to the second half of the year, the stability resilience of asset-side yield will be the core variable determining the differentiation of net interest margin among listed banks. Differentiation of loan yield will be jointly determined by three factors: "pressure of high-interest matured loans substitution, regional bargaining power, adjustment of high-yield retail proportion" First, the pressure of high-interest matured loans substitution is a key drag, with long-term high-interest loans mainly concentrated in the field of municipal investment and traditional manufacturing. However, the significant regional differentiation has been evident since 2024, with considerable progress made in debt conversion. Second, bargaining power will amplify the differentiation among banks, and banks with regional advantages, a well-established industry chain layout, and strong customer loyalty will be able to maintain higher interest rates in loan substitutions. Third, the continuous decline in the proportion of high-yield retail loans will continue to drag down average loan yields for the entire banking sector. However, retail business is also a key factor in creating a moat under the industry's asset shortage, and banks that can maintain stable growth in high-yield retail assets will enjoy a medium to long-term premium. How to quantify the pressure of high-interest matured loans substitution and the pressure of the declining proportion of high-yield retail loans (1) For the pressure of high-interest matured loans substitution, a quantitative model of high-interest loan exposure is constructed based on three dimensions: "structure - interest rate - trend", with scores assigned to 42 listed banks. The results show that banks with high exposure to high-interest matured loans are mainly concentrated in western and central city commercial banks; banks with medium-high exposure are mainly city commercial banks and joint-stock banks, with the common feature of a relatively high proportion of municipal investment loans, although some pressure has been released due to the significant decline in interest rates in the past two years. It is important to note that high exposure does not necessarily mean high losses, and the actual impact of matured loan substitutions will be much lower than the model score if the bank's proportion of matured loans is at a low level compared to peers, or if it has strong regional bargaining power. However, banks with high exposure scores mentioned above need to be closely monitored. (2) For the impact of the declining proportion of high-yield retail loans, focus on banks where the yield on retail loans is significantly higher than that of corporate loans and where, in a soft retail credit environment, corporate loans maintain faster growth. From multiple perspectives, Bank of Nanjing and Bank of Ningbo may face pressures higher than their peers, while Hua Xia Bank, Bank of Beijing, Jiangsu Changshu Rural Commercial Bank, and Bank of Changsha also face significant pressures. Risk warning: Economic recovery falling short of expectations, short-term impact of regulatory policy changes on bank fundamentals, etc.