Scale support and quality improvement. On the first trading day after the "929" new policy was announced, the real estate sector of the A-share market swung wildly, while bank stocks continued to strengthen, with Industrial and Commercial Bank of China and Bank of China shares hitting new highs again. From the central bank's structural rate cuts to the Ministry of Finance's mortgage interest subsidies, what impact will the package of incremental policies have on banks? Based on interviews and institutional analysis, the new policies further release a signal of fiscal-financial coordination around stabilizing investment and stabilizing real estate, which will boost bank operations from both the retail and corporate ends. Combined with market sector rotation and the post-holiday window for interim dividends, some institutional analysts believe bank stocks are expected to reach new highs again.
The New Policies Take Effect, Bank Stocks Strengthen Broadly
On the last trading day before the long holiday, the three major A-share indices moved in different directions. Affected by the incremental policies "landing," the real estate sector fluctuated sharply that day, with Shenzhen Properties A staging a "floor-to-ceiling board" swing, while China Vanke A and Gemdale Corporation once hit the daily limit down in early trading before rebounding sharply. The banking sector performed strongly, ranking fourth among the 31 Shenwan first-level industries by gain. As of the close, the CSI Bank Index rose 1.52%, with all sector stocks in the green. Among them, Shanghai Pudong Development Bank rose more than 3%, while Qilu Bank, Bank of Changsha, Bank of Chengdu and many others rose more than 2%; Industrial and Commercial Bank of China and Bank of China each rose more than 1%, with their share prices hitting new highs again. From the afternoon to the evening of the 29th, multiple incremental policies previously set by the State Council executive meeting landed intensively. First, monetary policy saw a structural rate cut, as the central bank lowered the PSL rate by 25 basis points to 1.5%, increased the re-lending quotas for science and technology innovation and for agriculture and small and micro businesses by 200 billion yuan and 500 billion yuan respectively, raised the support ratio for the former, and included the "six networks" within the scope of PSL tools; second, on the fiscal side, the long-awaited mortgage interest subsidy policy landed with great weight. Taken together, these policies may deliver practical benefits to banking business from both retail and corporate sides, and the persistently pressured credit scale and asset quality (especially retail non-performing loans) are both expected to improve.
"The central bank is implementing targeted support through designated rate cuts and expanded re-lending, effectively safeguarding banks' net interest margin space without lowering the LPR; at the same time, the first-home fiscal interest subsidy policy opens new space on the demand side, not only directly easing residents' debt burden and stimulating release of rigid demand, but also helping bank mortgage credit stabilize and asset quality remain stable," said Ma Tingting, chief banking analyst at Guotai Haitong. A CICC report pointed out that the two policies are working in combination this time. On one hand, they aim to boost domestic demand in the household sector, reverse the ongoing deleveraging trend among residents, and ease downward pressure on the balance of property loans; on the other hand, they rely on government and state-owned enterprise leverage to drive infrastructure-related credit投放 such as the six networks. The policies stimulate credit demand in both directions while trying to avoid significant pressure on bank interest margins. For large state-owned banks with a higher share of personal housing loans and infrastructure loans, the boost to credit demand will be more obvious. Taking the mortgage interest subsidy policy as an example, in the view of Dong Ximiao, chief economist at Zhaolian and deputy director of the Shanghai Finance and Development Laboratory, the most core impact of the central fiscal interest subsidy on the banking industry is that it replaces "banks giving up profits" with "fiscal giving up profits," providing a "floor" for personal housing loan business without directly compressing net interest margin. Ma Tingting also said that the relevant policies not only provide high-quality assets as a handle, but also protect banks' interest margin returns, which will drive commercial banks to achieve both volume and quality improvement in mortgage business. "In the second quarter, commercial banks' net interest margin had already fallen to a low of about 1.41%, leaving limited room for further LPR cuts; the interest subsidy borne by fiscal authorities is about 1 percentage point of interest, reducing borrowers' actual rate to about 2%, but banks' contractual rates are untouched, equivalent to a targeted rate cut whose cost is not borne by banks. At the same time, the balance of personal housing loans has declined for multiple consecutive quarters, and the interest subsidy focuses on newly issued first-home mortgages, which is expected to drive personal housing loan disbursements to stop falling and rebound, improve the retail credit 'asset shortage,' and optimize customer structure by leaning toward rigid-demand groups with lower credit risk. In addition, the interest subsidy also eases debt repayment pressure by lowering monthly payments, helping curb the rise in the non-performing loan ratio of personal housing loans and indirectly stabilizing the quality of small and micro enterprise loans and personal business loans secured by property," Dong Ximiao told reporters. However, multiple industry insiders told reporters that considering the relatively limited scope of policy benefits, the beneficiaries of the new interest subsidy policy are mainly rigid-demand buyers in third- and fourth-tier cities and some second-tier cities, but this opens up more room for imagination for additional incremental policies. "Overall, this is a structural and阶段性 policy tool, and it still needs continuous optimization going forward," Dong Ximiao said. Wang Xianshuang, chief banking analyst at Guolian Minsheng Securities, believes that as fiscal policy returns and policy focuses on the credit side, the banking "asset shortage" pattern that has lasted for three quarters is expected to reach a turning point. Considering that after the National Day holiday the banking sector will enter the interim dividend window, and that new insurance asset-liability rules will push insurance funds to increase dividend stock allocations, it is expected that the banking sector may hit new highs around the Spring Festival.
Retail and Corporate Credit Welcome Good News, but Effects Still Need Observation
Against the backdrop of banks' credit "slowing down and improving quality," the market is closely watching the new policies' boosting effect on banks' asset side. Financial data disclosed by the central bank show that in the first eight months of this year, monthly new RMB loans of financial institutions all increased less than the same period last year. Among them, household loans recorded negative growth in February, April, May, July, and August. In addition, judging from banks' semi-annual reports, in the first six months of this year, the mortgage balance of the six major state-owned banks shrank by more than 500 billion yuan again. The central bank's "Statistical Report on Loan Investment by Financial Institutions in the Second Quarter of 2026" shows that as of the end of June, the balance of personal housing loans was 36.29 trillion yuan, a decrease of 716.3 billion yuan in the first half, and its share of total credit balance fell to 12.8%. The Ministry of Finance, the central bank, and the National Financial Regulatory Administration recently jointly issued the "Notice on Implementing the Interest Subsidy Policy for Residential Housing Loans," clarifying that starting October 1, a one-year nationwide interest subsidy policy for residential housing loans will be implemented. Those meeting three conditions can enjoy annualized 1% interest subsidy support (on loan principal within 1 million yuan) for up to 5 years: first, using a newly issued commercial personal housing loan to purchase a first home (excluding using a newly issued commercial personal housing loan to replace existing loans); second, the purchased housing has a floor area of less than 120 square meters; third, the purchased housing price is below 1.5 million yuan. According to calculations by the real estate team at CICC, the interest subsidy policy can support about 1.8 trillion yuan of loans each year, accounting for 30% to 40% of newly issued loans, and reduce residents' interest expenses by about 18.2 billion yuan annually. Lin Yingqi, a banking analyst at CICC, said that the newly issued loans supported by the interest subsidy each year account for about 5% of the outstanding personal mortgage scale, which can play a certain supporting role. Wang Xianshuang believes that whether monetary policy or fiscal policy, to have an effect on the economy, it ultimately needs to be reflected on the credit (loan) side. "This series of policies is a typical monetary-fiscal coordination, easing credit to promote domestic demand. PSL and re-lending are monetary measures to promote credit. On one hand, they encourage banking institutions to extend loans; on the other hand, they inject medium- and long-term base money. It is expected that the probability of short-term RRR cuts and rate cuts will decline. Mortgage interest subsidies are fiscal measures to promote credit. As the peak of household loan maturities passes and the new real estate system benefits new home demand, it is expected that real estate and household credit will recover next year," he said. However, the latest CF40 report argues that housing loan interest subsidies can reduce the cost of loan home purchases for rigid-demand families in low-price areas, but the incremental housing demand that can be generated still needs observation. "From the policy design, it can be seen that this housing loan interest subsidy policy only targets first-home buyers, anchored to third- and fourth-tier cities with lower total home prices, as well as low-total-price properties in some first- and second-tier cities, mainly concentrated in urban fringe areas and 'old and small' properties in urban districts," the report said. For this group of low-total-price rigid-demand homebuyers, the subsidy effect of the interest subsidy policy will be relatively direct, but in some low-price cities, the current insufficient real estate demand is not only due to high loan interest rates, but is also affected by factors such as population mobility, income expectations, and housing price expectations. Therefore, relying solely on the mortgage interest subsidy policy makes it very difficult to change the overall trend of the real estate market in most third-tier and lower cities. Zeng Gang, dean of the Tianfu Lijian Institute of Finance, believes that among various market entities, commercial banks are most directly and also most complexly affected by the mortgage interest subsidy policy. "The price ceiling set by the policy determines that the benefits are mainly concentrated in third- and fourth-tier cities, some second-tier cities, and suburbs of first-tier cities. City commercial banks and rural commercial banks deeply rooted in these areas, as well as large state-owned banks with broad county-level branch networks, are expected to obtain more new mortgage business; banks whose business is mainly concentrated in core areas of first-tier cities will benefit relatively limitedly," he said. An insider at a leading city commercial bank told reporters that based on the bank's internal estimates using mortgage business conditions in the first nine months of this year, customers eligible for the interest subsidy account for about 30% of new mortgage customers, and commercial loan amounts eligible for the subsidy account for about 10% of commercial loans. At present, the bank is actively contacting eligible in-process customers and sorting out and connecting with cooperating projects' area and price conditions, while also increasing marketing efforts through second-hand housing channels. In addition to the retail side, measures such as the central bank's structural rate cuts are also expected to boost banks' corporate credit demand. "Under the above policies to stabilize investment and stabilize real estate, investment and credit growth are expected to stabilize marginally in the fourth quarter, but the key depends on how much investment scale the 'six networks' can ultimately generate, and whether they can effectively offset the contractionary pressure brought by factors such as hidden debt resolution and shrinking land transactions," the CF40 report analyzed. Although new policy-based financial tools and PSL both have policy-based financial attributes, their operating mechanisms are not the same. The latter is more suitable for projects with lower financial returns, longer construction cycles, and stronger public returns. CICC, combined with previous estimates by the National Development and Reform Commission, said that considering that during the "15th Five-Year Plan" period the investment scale of new-type power grids, underground pipe networks, computing power networks, and national water networks will total more than 20 trillion yuan, assuming 80% of that is funded by loans, it could cumulatively drive more than 16 trillion yuan in loans, with an average annual boost to loan growth of 1.4 percentage points.