On September 10th, the banking sector demonstrated resilience against a soft market backdrop, with the Wind Banking Index advancing 1.54% by the close of trading, accompanied by a wave of record-breaking performances among individual stocks. Bank of Ningbo led the charge, climbing 3.49% to close at RMB 35.87 per share, having touched an intraday high of RMB 36.03 that marked its strongest level since February 2022. This puts the lender tantalizingly close to its all-time peak of RMB 36.71 recorded in February 2021, with market participants closely watching for a potential breakout.
Five banking stocks surged to unprecedented territory simultaneously. Bank of Nanjing advanced 3.16% to close at RMB 12.40, Bank of Jiangsu rose 2.35% to RMB 12.62, Bank of Hangzhou gained 2.31% to RMB 17.68, and Bank of Chengdu climbed 2.11% to RMB 20.28 — each closing at a historic high. Meanwhile, China CITIC Bank touched a record RMB 9.02 intraday before settling. Additional notable gainers included Bank of Qingdao, Bank of Wuxi, Bank of Suzhou, Bank of Shanghai, and Bank of Communications, all advancing more than 2%.
September has proven exceptionally favorable for the banking sector, with data compiled by financial media revealing that eight banking stocks have achieved all-time highs within the month. Beyond the five mentioned above, China Construction Bank and Bank of China set new records on September 3rd, while ICBC accomplished this feat on September 2nd, underscoring the breadth of the sector-wide rally.
The surge in share prices finds solid grounding in improving fundamentals. Semi-annual reports indicate that among the 42 A-share listed banks, 36 achieved positive year-on-year revenue growth — six more than the identical period in 2025 — while an equal number posted positive net profit growth attributed to shareholders, representing an increase of two. This demonstrates a notably broadened scope of performance recovery across the industry, suggesting that the sector's earnings downturn may be reversing course.
Net interest margin remains the critical battlefront for banking operations. The average NIM across the 42 listed banks stands at 1.52%, essentially flat compared to the start of the year, bringing an end to five consecutive years of decline. Nearly half of these banks have witnessed their NIMs bottom out and begin recovering, providing solid underpinning for potential valuation re-rating across the sector. This stabilization marks a significant inflection point for an industry that has grappled with persistent margin compression throughout recent cycles.
Research from Guosen Securities suggests that 2026 is likely to see listed banks' NIMs finally bottom out. However, the firm cautions that stabilization should not breed complacency. The first-half NIM improvement was primarily driven by reduced liability costs stemming from the concentrated maturity of high-rate deposits. This beneficial effect will noticeably diminish in the second half, shifting the decisive factors from the liability side to the asset side. The replacement of maturing high-rate loans, regional pricing power, and the proportion of high-yield retail business will collectively determine the resilience of individual banks' loan yields, potentially widening the divergence in NIM performance across the sector.
Asset quality metrics remain stable across the industry. Real estate risks are accelerating toward resolution, while retail-related risks continue their natural exposure cycle. Among the 42 listed banks, 24 reported a decline in non-performing loan ratios from the start of the year, 10 remained unchanged, and only a minority saw slight increases. This steady credit profile reinforces investor confidence in the sector's risk management capabilities.
The prospect of sustainable dividend distributions is increasingly attracting medium-to-long-term allocators. Wind data reveals that 20 banking stocks have already disclosed interim dividend proposals for 2026, with combined payouts reaching RMB 266.1 billion. The six major state-owned banks alone account for approximately RMB 221 billion of this total. Among detailed proposals: ICBC intends a dividend of RMB 1.511 per 10 shares (pre-tax), totaling approximately RMB 53.85 billion; China Construction Bank plans RMB 2.01 per 10 shares (pre-tax), aggregating around RMB 52.58 billion; Agricultural Bank of China offers RMB 1.297 per 10 shares (pre-tax), amounting to roughly RMB 45.39 billion; Bank of China declares RMB 1.19 per 10 shares, distributing approximately RMB 38.34 billion; Postal Savings Bank sets RMB 1.33 per 10 shares (pre-tax), totaling about RMB 15.97 billion; and Bank of Communications allocates RMB 0.168 per share, with an aggregate of approximately RMB 14.85 billion.
Capital flow analysis from CITIC Securities reveals sustained long-term inflows into the banking sector, primarily driven by risk-averse institutional investors such as insurance funds. These investors continue to demonstrate strong appetite for both A-share and H-share bank equities, notably increasing allocation intensity during the first half even as passive funds exhibited outflows. Looking ahead to the third quarter, the brokerage anticipates core variables including NIM and asset quality to remain stable, with full-year earnings trends staying positive. Combined with ongoing macro-narrative developments, the sector is expected to sustain positive absolute returns throughout the remainder of the year, cementing the banking sector's appeal as a cornerstone of defensive portfolio positioning.