The Zhitong Finance app learned that Guangfa Securities released a research report saying that on November 14, the China Financial Supervisory Administration announced data on the main regulatory indicators of the banking industry for the third quarter of 2023. Overall, against the backdrop of narrowing interest spreads, the overall performance of the banking sector is still under pressure. The expanding sector is relatively divided, but asset quality is still stable, and profits can be fed back to a certain extent. Currently, the market is still paying attention to the effects of policy efforts to reach entities and residents' confidence, but policy reality and expectations are gradually being strengthened. In this environment, the market liquidity environment is generally relatively generous, and the banking sector will definitely benefit.

It is recommended to focus on three directions: 1. Some high-quality urban commercial banks have pulled back a lot this year. They have now entered the allocation range and are expected to benefit from further easing among banks; 2. Fiscal strength, focus on banks benefiting from the gradual improvement in economic expectations; 3. Long-term absolute beneficiaries can continue to focus on banks with steady performance and high dividends.

The main views of GF Securities are as follows:

On November 14, 2023, the China Financial Supervisory Administration announced data on the main regulatory indicators of the banking industry for the third quarter of 2023. The comments are as follows:

(1) Performance: The performance growth rate of the agricultural and commercial sector is high, mainly due to increased preparation and planning under risk exposure last year, and the base figure is low; the performance growth rate of the urban business sector declined slightly, but overall it is more resilient. Combined with other indicators, it is expected to benefit from steady expansion of scale and provision for backfeed; the performance of the state-owned industry improved month-on-month, and stock banks are still under pressure.

(2) Scale: State-owned banks and urban commercial banks are expanding rapidly, credit investment is relatively strong, and the growth rate of non-credit assets in the state-owned banks and agricultural commercial banks is clearly low. It is expected to be mainly affected by the new capital regulations, which will reduce the pressure on interbank assets in the balance sheet. Credit investment in stock banks is still weak, and may mainly rely on financial investment, interbank and other non-credit assets to expand.

(3) Interest spreads: Slightly narrowed, and later or still under pressure.

(4) Asset quality: The overall positive trend has not changed.

(5) Capital: Risk-weighted asset growth is increasing, and attention is paid to the impact of the new capital regulations after implementation.

Current data (2023/11/13 to 11/19): According to Wind's disclosure, the central bank's net investment in the open market for the current period was 1.11 trillion yuan, of which 511 billion yuan was net investment in reverse repurchases and 600 billion yuan in MLF. The reverse repurchase balance at the end of the period was higher than in the same period in history. Capital interest rates rose markedly first, then fluctuated in a narrow range. It is expected to be disrupted by the tax period, and interbank liquidity is neutral. The net payment of government bonds for the next period (11/20 to 11/26) is about 467.7 billion yuan, an increase from the current period. At the same time, the reverse repurchase period is 1.76 trillion yuan. Attention should be paid to the disturbance of government bond payments and capital returns on interbank liquidity. Considering the large-scale incremental continuation of the current MLF period, the probability of a downgrade in the short term is not expected.

The current deposit was issued 754.5 billion yuan, and the weighted average issuance interest rate rose by 4 bps. In terms of term structure, 3M's share declined markedly compared to the previous period. It is expected that due to the increase in the central bank's open market investment in this period, the demand for banks to supplement liquidity has weakened. Among medium- to long-term deposit books, the share of 6M issuance is still higher than 1Y, or due to current high deposit prices, banks are limited in their willingness to issue long-term deposit certificates. In terms of interest rates on notes, 1M fluctuated in a narrow range, fell by more than 3M, and 10-year treasury bond yields still fluctuated in a narrow range. Market expectations about the economy are still divided.

Next focus (11/20 to 11/26): Monetary policy implementation report for the third quarter.

Risk warning: (1) economic growth fell beyond expectations; (2) fiscal policy fell short of expectations.