Behind the "Collective Jubilation" of Bank Stocks: A Capital Migration Driven by "Certainty"
Hello everyone, I'm your financial observer. Recently, there's been a particularly interesting phenomenon in the A-share market: while other sectors are experiencing volatile ups and downs, bank stocks have been rising steadily, as if they had some kind of advantage. On September 10th, the bank sector saw a strong counter-trend increase, with many individual stocks hitting new historical highs. Even the traditionally perceived "heavy" state-owned banks and the more "flexible" city commercial banks all set new records.
Many retail investors might be wondering: Why have bank stocks suddenly become so strong? Is there some major positive news, or is it just speculation? Can I still invest in them now?
Don't worry; let's break down this news and explain the logic behind it in simple terms. This is not just about a few dollars increase in stock prices; it represents a significant shift in the market's overall view of the banking industry as a business.
---
1. Performance Turnaround: From "Widespread Losses" to "Substantial Recovery"
In the past, people were hesitant to buy bank stocks because the biggest concern was that banks were finding it increasingly difficult to make profits, and their profits were declining. But the news indicates that the scope of performance improvement has significantly expanded.
- What was the situation before? In 2025, only around 30 banks had positive revenue growth, and about 34 had positive net profit growth. In other words, most banks were either losing money or experiencing flat performance.
- What's the situation now? By the mid-year 2026 reports, out of the 42 listed banks, 36 had positive revenue growth and 36 had positive net profit growth.
What does this mean?
It means that the banking industry is no longer just a few star performers holding up the overall sector; the vast majority are making profits. This widespread improvement in performance gives investors a sense of security. It's similar to investing in funds: if 9 out of 10 stocks are rising, you feel more confident; if only one is rising and the other 9 are falling, you're unlikely to invest heavily. The bank sector currently has a situation where 9 stocks are rising and 1 is flat, with solid fundamentals supporting the stock prices.
---
2. The Critical Indicator: Net Interest Margin Stabilizes
The core logic of how banks make money is simple: they earn a profit by lending at higher interest rates than they pay for deposits. This profit margin is known as the "net interest margin."
Over the past five years, this margin has been shrinking (due to slower declines in deposit interest rates and faster declines in loan interest rates), putting pressure on bank profits. However, the news reports that the average net interest margin for the 42 banks was 1.52%, the same as at the beginning of the year, ending a five-year downward trend!
- Why has it stabilized? In the first half of the year, it was mainly because high-interest fixed deposits expired, and banks were able to reprice their loans, reducing their costs.
- What about the second half of the year? Guosen Securities warns that this doesn't mean banks will automatically make profits. The focus in the second half will shift from "saving money" (on the deposit side) to "making money" (on the loan side).
- Will the high-interest loans from before expire, and can banks maintain the same interest rates for new loans?
- Banks in different regions have varying bargaining power; some can offer higher interest rates, while others can only offer lower ones.
- Banks with a larger proportion of retail business (such as credit cards and consumer loans) may have more stable earnings.
In simple terms: Banks are no longer as concerned about high deposit costs; they're now more worried about whether they can maintain high loan interest rates. Although the margin has stabilized in the short term, the long-term success will depend on how well each bank manages its lending activities.
---
3. Improving Asset Quality: Fewer Bad Loans, Clearing Risks
One of the biggest fears when investing in stocks is encountering a large amount of non-collectible debt (bad loans). For banks, this is reflected in the non-performing loan ratio.
The news shows that the non-performing loan ratio of 24 banks has decreased compared to the beginning of the year, with only a few showing an increase.
- Real Estate Risks are Being Cleared: There was concern that unfinished real estate projects could drag down banks, but it seems that most of the potential risks have been addressed, and the remaining risks are within manageable limits.
- Retail Risks are Gradually Revealing Themselves: The risks associated with personal loans (such as mortgages and consumer loans) are still emerging, but overall, the situation is stable.
What does this mean for investors?
It means that banks' financial health has improved. Previously, there were concerns that banks were operating with underlying issues, but now it seems that most banks are in good shape or even getting better. This expectation of stable asset quality is a key reason why long-term investors are willing to enter the market.
---
4. Real Dividends: 266.1 Billion Yuan in Payments, Turning Banks into "Bond-like Investments"
Perhaps the most tangible aspect is the dividends:
The news shows that 20 bank stocks have disclosed their 2026 mid-year dividend plans, with a total of 266.1 billion yuan in payouts. The six major state-owned banks (ICBC, ABC, BOC, CCB, BOCOM, and PSBC) alone account for 221 billion yuan.
- Let's do the math: For example, ICBC plans to pay 1.511 yuan per 10 shares, totaling 53.8 billion yuan. For investors holding ICBC stocks, this is like receiving a regular annual income.
- Why is this important? In a market with high volatility and difficulty in making profits, stable cash flows are more attractive than potential stock price increases.
- If you invest in bank stocks, you may not expect them to double in value in a year, but you can expect a 5%-7% annual dividend, making them a substitute for "high-interest bonds."
- This is especially appealing to insurance companies and pension funds, which value stable, sustainable dividends.
In simple terms: Bank stocks are no longer just stocks; they're more like "laying hens" that produce regular income. You buy them not only for potential price increases but also for the annual dividends.
---
5. Smart Money Entering the Market: Insurance Funds are Increasing Their Holdings
Finally, let's look at who is buying these stocks. CITIC Securities notes that long-term funds (mainly insurance funds) are continuously flowing into the bank sector.
- Who is buying? Insurance companies, pension funds, and other "low-risk" investors. These investors are cautious, seek stability, and value long-term returns.
- Why are they buying?
1. Continued Interest in A-share and H-share Banks: They believe bank stocks are reasonably valued and offer stable dividends.
2. Passive Outflows in the First Half, Active Increases in the Second Half: Some funds were forced to sell bank stocks in the first half due to regulations, but insurance funds took the opportunity to increase their holdings.
3. Macroeconomic Logic: During economic transformation, banks, as the core of the financial system, are seen as a source of macroeconomic stability.
What does this mean for retail investors?
When "smart money" (institutions and insurance funds) starts buying consistently, it often indicates that the market has a consensus on the long-term value of the sector. Although stock prices may fluctuate in the short term, with these stabilizing forces in place, the potential for decline is limited, and the potential for growth is greater.
---
Summary: Why Are Bank Stocks Strong?
1. Improving Fundamentals: 36 out of 42 banks are experiencing positive performance, indicating a collective recovery.
2. Stabilized Core Indicators: The net interest margin has stopped declining after five years of decline, and although there are pressures in the second half, a short-term bottom has been reached.
3. Controllable Risks: The non-performing loan ratio has decreased, real estate risks have been cleared, and asset quality is stable.
4. Attractive Dividends: 266.1 billion yuan in dividends provide stable cash flows, attracting long-term investors.
5. Support from Capital: Long-term funds, such as insurance funds, are continuing to enter the market, creating a positive cycle where buying increases as prices fall.
Recommendation for Retail Investors:
Bank stocks are currently driven by a combination of improving performance, attractive dividends, and valuation recovery. If you seek stable returns and are willing to avoid large fluctuations, bank stocks are a good investment option, especially those with high dividends and good asset quality. However, keep in mind that the net interest margin may still face pressures in the second half of the year, so don't rush to buy at high prices. Focus on banks with advantages in lending and strong retail businesses.
In one sentence: Bank stocks are no longer considered a "sunset industry"; they have become a "cash cow" that provides regular income.