Understanding the Market | Domestic Bank Stocks Continue to Rise, Third Quarter Bank Profit Growth Continues, Marginal Improvement in Interest Margin
Domestic bank stocks continue to rise, with China Merchants Bank up 2.88%, Bank of Chongqing up 2.85%, CITIC Bank up 2.6%, MINSHENG BANK up 2.46%, and HUISHANG BANK up 2.29%. Morgan Stanley's research report points out that although investment income has declined, net interest income and fee income of mainland banks have both increased. State-owned banks are expected to see profit growth in the third quarter of 2025 higher than in the first half of the year, with a rebound in net interest margin. Zhejiang Merchants Securities indicates that the performance of listed banks slightly exceeded expectations, with revenue growth remaining flat and profit growth slightly improving, and it is expected that the market will perform better in Q4
According to Zhitong Finance APP, the domestic bank stocks continue to rise. As of the time of publication, China Merchants Bank (03968) rose by 2.88% to HKD 51.15; Bank of Chongqing (01963) rose by 2.85% to HKD 8.29; CITIC Bank (00998) rose by 2.6% to HKD 7.51; MINSHENG BANK (01988) rose by 2.46% to HKD 4.16; HUISHANG BANK (03698) rose by 2.29% to HKD 3.57.
Morgan Stanley released a research report stating that regarding the third-quarter performance of domestic bank stocks this year, although investment income has declined, more banks in mainland China reported improvements in net interest income growth and healthy growth in fee income. Most state-owned banks are expected to see profit growth in the third quarter of 2025 surpassing that of the first half of the year, benefiting from stable asset quality. The report continued to indicate that although state-owned banks in mainland China still face some pressure on net interest margins, most of the joint-stock banks covered by the report reported a rebound in net interest margins in the third quarter of 2025, supported by lower funding costs and more prudent loan growth and pricing, which bolstered net interest income growth.
Zhejiang Merchants Securities pointed out that the performance of listed banks in the first three quarters of 2025 slightly exceeded expectations, with revenue growth remaining flat and profit growth slightly improving. In terms of driving factors, the marginal improvement in the impact of interest margins on revenue in the third quarter of 2025, along with increased contributions from impairments to profits; the slowdown in scale and non-interest income growth dragged down revenue performance, while increased costs and tax expenditures negatively impacted profit performance. The revenue and profit growth rates in the banks' third-quarter reports showed strong resilience, with the overall performance of the industry turning positive, and the rebound in interest margins for small and medium-sized banks exceeding expectations. Previously, bank stocks were suppressed by major funds, but with limited chips, the market style is rebalancing, and a deep squat jump is expected in Q4
