Tianfeng Securities: Short-term adjustment of bank stocks does not change the long-term positive logic.

The Tianfeng Securities research report stated that since July 11, bank stocks have experienced a significant pullback, with the bank index falling by 3.41% as of July 18. The decline in stock prices may be mainly influenced by three factors: a phase adjustment after a strong previous uptrend, increased selling pressure from arbitrage funds using the strategy of "buying for dividends and selling immediately", and recent high-level reduction of holdings by some bank shareholders which may have a certain impact on market sentiment. After this round of pullback, Tianfeng Securities believes that the long-term trend of valuation repair for bank stocks remains positive for the following reasons: 1. The possibility of realizing part of the expectations for marginal improvement in fundamentals in the first half of 2025. Specifically: stabilizing net interest margins, continued improvement in non-interest income, and ongoing relief of bank asset quality pressure through measures such as early issuance and use of replacement bonds and implementation of comprehensive financial policies, which can support profit with overall sufficient provisions in the industry. 2. The valuation repair trend under the drive of funds is likely to continue, specifically: under the background of low interest rates and "asset shortage", the advantage of high dividend and bond-like characteristics of banks is prominent; within the high dividend sector, banks with low valuations have significant advantages; continuous inflow of incremental funds will drive significant valuation repairs in the banking sector. Based on the above, Tianfeng Securities recommends Chengdu Bank and Changshu Bank among high-quality regional small and medium-sized banks; and recommends ICBC, Agricultural Bank of China, Bank of China, and Postal Savings Bank of China among state-owned banks.