Chinese banking stocks are mostly trading higher, with CITIC BANK (00998) up 2.86% at HK$8.64, ICBC (01398) up 2.46% at HK$7.7, PSBC (01658) up 1.88% at HK$5.425, and BANK OF CHINA (03988) up 1.59% at HK$6.075.

On the news front, in the first half of this year, the six major banks together reported total operating revenue exceeding 2 trillion yuan, an increase of approximately 171.9 billion yuan year-on-year. Their combined net profit attributable to shareholders reached about 712.6 billion yuan, up nearly 30.1 billion yuan compared to the same period last year. Combined with the interim profit distribution plans disclosed at the same time, all six major banks will continue to pay interim dividends, with the total proposed dividend amount approaching 221 billion yuan, an increase of about 16.3 billion yuan from a year earlier, and the dividend payout ratio generally rising to 31%.

CITIC Securities noted that from a medium-term perspective, the banking sector has entered the tail end of the risk cycle, with the first derivative of ROE already improving. It is expected that the absolute level of industry ROE will stabilize this year and next, ranging between 8% and 9%, which will help boost the sector's valuation. The sector is expected to be re-rated from a "high-dividend defensive asset" to a "high-certainty equity asset." The banking sector will continue to show an upward valuation trend, and the full-year absolute return potential is expected to persist.