Zhongtai Securities has released a research report stating that it expects listed banks to post revenue growth of 7.4% year-on-year and net profit growth of 3.1% year-on-year for the first three quarters of 2026, with full-year revenue up 7.4% and net profit up 3.3%. Net interest margin is basically stable, with net interest income rising 7.9% year-on-year forming the main support; fee income is relatively weak, with fee income up 0.8% year-on-year; other non-interest income benefits from Changxin unrealized gains and a low base, rising 11.6% year-on-year. Credit growth is lower year-on-year, with the trend of bond financing replacing loans continuing. Retail risk continues to be exposed, but corporate asset quality remains sound, and banks are using bumper profits to cover shortfalls, keeping profits stable. There are two main investment themes in bank stocks: first, city and rural commercial banks with regional advantages and strong certainty, in regions including Jiangsu, Shanghai, Chengdu-Chongqing, Shandong and Fujian; second, the logic of high dividends and stability, with a focus on large banks, as well as some joint-stock banks. The main views of Zhongtai Securities are as follows.

Core views: First, strong revenue resilience. Net interest margin is basically stable, and interest income resilience is strong; fee income is slightly under pressure, but large banks have unrealized investment gains from Changxin, while small and medium-sized banks benefit from a low base for other non-interest income in the third quarter of 2025 and a bond market decline in the third quarter of 2026. Overall, other non-interest income growth for listed banks in the third quarter of 2026 may recover marginally. In summary, revenue for the first three quarters of 2026 is expected to rise 7.4% year-on-year. Second, net profit performance is expected to be stable: retail risk is expected to continue to be exposed, while corporate business supports overall asset quality stability; revenue resilience supports listed banks in using bumper profits to cover shortfalls, and net profit growth is expected to be stable. Net profit for the first three quarters of 2026 is expected to rise 3.1% year-on-year.

Total credit: September credit is expected to be lower year-on-year, and the cumulative growth rate of aggregate financing to the real economy and credit is expected to fall to 4.67%, with the trend of bond financing replacing loans continuing. (1) August credit review: the balance of RMB loans in August increased by 60 billion yuan from the end of July, down 530 billion yuan year-on-year; for corporate loans, the balance of short-term loans decreased from the previous month and weakened year-on-year, while the balance of medium- and long-term loans increased but the increment was less than the same period last year; for household loans, the balances of both short-term and medium- and long-term loans declined from the previous month and weakened year-on-year. The trend of bond financing replacing loans continued: in August, new corporate bond financing was 271.2 billion yuan and new equity financing was 63.9 billion yuan, up 137.4 billion yuan and 18.3 billion yuan year-on-year respectively. The interest rate environment is generally at a historical low, while loans are constrained by the lower limit of the self-discipline mechanism, and some enterprises have shifted their financing structure toward bond financing replacing loans to optimize their financing structure. (2) September credit outlook: the cumulative growth rate of credit in aggregate financing is expected to edge down from 4.9% in August to 4.67% in September. Quarter-end window dressing is expected, but the increment is still expected to be lower year-on-year, mainly relying on the corporate side, while the household side remains weak. (3) Regional credit divergence: regional divergence is expected to continue in the third quarter of 2026. As of the end of August 2026, among major economically strong provinces, those with credit growth above 6.5% were Sichuan (8.7%), Jiangsu (8.6%), Shandong (7.2%) and Zhejiang (6.8%).

Net interest margin forecast: net interest margin is expected to be basically stable in the second quarter, and in subsequent quarters it is expected to face slight downward pressure quarter-on-quarter due to the seasonal weakening of deposit repricing. (1) Second-quarter 2026 net interest margin review: the single-quarter annualized net interest margin of listed banks in the second quarter of 2026 was 1.38%, flat quarter-on-quarter; asset-side yields and liability-side funding costs fell 6bp and 7bp quarter-on-quarter respectively, roughly in line with the decline in the first quarter of 2026. (2) Subsequent net interest margin outlook: the scale of liability-side repricing is expected to decline in the second half of the year, and net interest margin is expected to fall by about 2bp in the second half, remaining generally stable.

Interest income: net interest income of listed banks is expected to rise 7.9% year-on-year in the first three quarters of 2026, with city commercial banks still able to maintain growth of more than 10%. Full-year net interest income of listed banks is expected to be 7.7%, an important support for full-year revenue and a significant improvement from previous years. Fee income: weak consumption drags down card transaction fee income, which remains weak, and the A-share market was also volatile in the third quarter. Fee income is unlikely to show high growth, and is expected to rise 0.8% year-on-year in the first three quarters of 2026 (up 1.1% year-on-year in the first half of 2026). First, premium income grew steadily: cumulative premium income from January to August 2026 was 4.82 trillion yuan, up slightly 0.4% year-on-year. Large-scale fixed deposits maturing combined with residents' low risk appetite mean insurance distribution is still expected to make a positive contribution to bank fee income. Second, public fund scale fluctuated in the third quarter: the scale of public funds nationwide fluctuated with stock market volatility in the third quarter, and the positive contribution to fee income is expected to weaken. Third, wealth management scale grew steadily: deposit migration helped wealth management scale grow relatively quickly, and it is expected to remain a positive contribution.

Other non-interest income: growth is expected to improve from the second quarter, thanks to unrealized gains from the Changxin investment and a low base, with growth of 11.6% year-on-year estimated for the first three quarters of 2026 (versus 7.5% year-on-year in the first half of 2026). First, unrealized gains from equity investment: Changxin Technology listed in the third quarter of 2026, and some banks (mainly large banks) have unrealized gains on their investments. Based on Changxin's market value of 3.6 trillion yuan, bank investment income accounts for an arithmetic average of 11.3% of 2025 net profit. Second, the sharp rise in the bond market in the third quarter of last year created a low base for other non-interest income: from June 30, 2025 to September 30, 2025, the 10-year government bond yield rose 21bp from 1.647% to 1.861%, and fair value losses created a low base for other non-interest income. From June 30, 2026 to September 24, 2026, the 10-year government bond yield fell 6bp from 1.733% to 1.674%, generating unrealized gains within the quarter.

Net profit forecast: retail risk continues to be exposed, and revenue resilience supports listed banks in using bumper profits to cover shortfalls. Retail risk continues to be exposed, banks maintain a certain level of provisioning, and profit release is relatively stable. First, retail risk is still being exposed: the retail non-performing loan ratio continued to rise to 1.52% in the first half of 2026, up 15bp from 2025. Retail non-performing loans accounted for 41% of total non-performing loans. Revenue is resilient, supporting banks in using bumper profits to cover shortfalls and maintaining a certain level of provisioning to prevent risk. Second, corporate business continues to provide support: the corporate non-performing loan ratio continued to fall to 1.14%, supporting controllable credit costs for listed banks overall. In summary, listed banks are expected to post revenue growth of 7.4% year-on-year in the first three quarters of 2026 and 7.4% for the full year of 2026; net profit is expected to remain relatively stable, and listed banks are still expected to use bumper profits to cover shortfalls, with growth of 3.1% and 3.3% year-on-year respectively for the first three quarters of 2026 and the full year of 2026. Certain full-year performance will bring steady returns for bank stocks in 2026, with short-term performance related to market style; the economic development model will continue (strong policy resolve), strong corporate business and continued low risk appetite among residents will drive net interest margin to bottom out and rebound, revenue growth will continue to be a highlight, and earnings certainty is strong. There are two main investment themes in bank stocks: first, city and rural commercial banks with regional advantages and strong certainty, in regions including Jiangsu, Shanghai, Chengdu-Chongqing, Shandong and Fujian; second, the logic of high dividends and stability, with a focus on large banks, as well as some joint-stock banks. Risk warnings: economic downturn exceeding expectations; untimely updating of research report information; policy implementation falling short of expectations.