Morningstar: Surprising strengthening trend in profit margins of Chinese state-owned banks

The stronger profit trend of the four major state-owned banks in China - Agricultural Bank of China, Bank of China, China Construction Bank, and Industrial and Commercial Bank of China - seems to have pleasantly surprised Tan Jiaping of Morningstar. She pointed out that the net interest income of these four banks in the first quarter increased by 7%-8% year-on-year after a decline in 2025. In a report, she stated that with their net interest margin stabilizing, the net interest income of these banks may grow by around 6% this year. Morningstar listed Agricultural Bank of China as the top choice among these four banks, as it outperformed its peers comprehensively. Morningstar raised the fair value estimate of Agricultural Bank of China's H shares by 3% to 7.20 Hong Kong dollars, and the A shares valuation to 6.30 Chinese Yuan. The H shares of the bank rose by 0.3% to 5.89 Hong Kong dollars, while the A shares fell by 1.9% to 6.79 Chinese Yuan.