The stock price has been in a long bull run for three years, and the four major state-owned banks have returned. Where is the driving force for the market going forward?

From 2023 to 2025, the stock price increase of Agricultural Bank was 215%, Industrial and Commercial Bank was 117%, Bank of China was 116%, and China Construction Bank was 98%, ranking among the top four among 15 diversified listed banks

By | Finance reporter Chen Hongjie

Editor | Yuan Man

In the short term, the stock market is a voting machine; while in the long term, it is a weighing machine. If, over the past three years, investors had held the shares of these four state-owned big banks—ICBC, ABC, BOC, and CCB—how much could the stock price have risen?

Wind (Wind) data shows that from 2023 to 2025, the stock price increase of Agricultural Bank was 215%, Industrial and Commercial Bank was 117%, Bank of China was 116%, and China Construction Bank was 98%, ranking among the top four among 15 diversified listed banks (state-owned big banks + nationwide joint-stock banks).

‌Stock prices are a comprehensive “vote” by the market on a bank’s value. According to analysis from senior industry figures, in recent years, with risk disposal in small and medium-sized banks and non-bank financial institutions, China’s banking industry overall has shown a trend of “returning” to the state-owned big banks.

But as external conditions such as low interest rates and population aging intensify, the net interest margins of ICBC, ABC, BOC, and CCB all fell to below 1.35% by the end of 2025. How they will grow in the future, and how they should transform next, affects not only investors’ interests but also financial stability.

Recently, multiple senior banking industry figures said that comprehensive development, internationalization, and refined operations will be the way forward for the banking industry. “It is recommended to actively expand businesses such as wealth management, investment banking, and financial market trading, appropriately increase the proportion of intermediary business income and overseas business income in total operating revenue, and drive a shift in the profit model from relying on traditional net interest spread to relying on comprehensive returns.” Liu Rongfa, Director of the Guangxi Financial Regulatory Bureau, wrote.

In ICBC’s view, as President Liu Jun of ICBC said, if a bank’s balance sheet is mainly driven by loans, it may be relatively far from the goal of becoming a world-class financial institution. “We must find our own path. We need to transform from a simple capital intermediary into a comprehensive service provider of a series of value factors such as capital information and efficiency,” he said.

“Since the beginning of 2026, the trend of large net outflows from index funds has temporarily come to a pause. Meanwhile, geopolitical conflicts have intensified, driving sharp fluctuations in resource prices, which in turn forces capital markets’ risk appetite to rebalance.” A banking analyst said. After sufficient earlier adjustments, the dividend yields of half of banking stocks have already returned to high levels of 4.5% and above. High-dividend “defensive” attributes and a low-valuation “safety margin” are both present, making the current allocation an outstanding value-for-money opportunity.

“With the implementation of large-scale capital injections from fiscal sources into the big state-owned banks, capital replenishment will further support lending and open up more room for medium- and long-term development.” A banking analyst told Finance reporter Chen Hongjie. Another analyst added that, in the short term, it is necessary to closely track marginal changes in economic fundamentals, the progress of resolving real estate risks, the direction of monetary policy adjustments, and the trend of the RMB exchange rate.

Stock prices surge for three consecutive years

Since 2023, bank stocks represented by state-owned big banks have begun to improve and rise sharply.

Finance reporter Chen Hongjie, based on Wind’s data compilation, shows that in 2023, the stock price increases of these four state-owned big banks—ICBC, ABC, BOC, and CCB—ranged from 17% to 34%; in 2024, the increases were between 42% and 55%; and in 2025, the increases were between 11% and 53%, outperforming other types of listed banks.

Further, from 2023 to 2025, the stock price increase of Agricultural Bank was 215%, Industrial and Commercial Bank was 117%, Bank of China was 116%, and China Construction Bank was 98%, with all ranking near the top among 42 listed A-share banks.

(Source: Wind)

On August 6, 2025, Agricultural Bank’s stock closed at 6.62 yuan per share, up 1.22%. Its A-share market value rose to 2.11 trillion yuan, surpassing Industrial and Commercial Bank’s 2.09 trillion yuan for the first time, placing it at the top of A-share market value for the first time.

More than two months later, on October 17, 2025, Agricultural Bank’s A-share price-to-book ratio (PB) once briefly exceeded 1, marking the first time since March 2018 that the long-standing “discount to book value” situation of state-owned big banks lasting seven years was broken.

The calculation logic of PB is the ratio of a company’s stock price to its net assets per share, and PB = 1 means that the net assets obtained for each 1 yuan invested are also 1 yuan.

“From a formula-based interpretation, a long-term return to a premium above book value for bank stocks could mean that the market believes that for every 1 yuan invested in bank stocks, the book value of net assets per share should be more than 1 yuan. Alternatively, it can be interpreted as investors believing that the book value of net assets per share for bank stocks needs to be discounted to some degree,” said a banking industry figure.

However, from early 2026 to February, CSI 300 ETFs (exchange-traded open-end index funds) and SSE 50 ETFs had shown a rapid trend of net outflows, while banks (especially many state-owned big banks and nationwide joint-stock banks) have relatively high weights in major broad-based indices. “In the short term, the banking sector is facing significant selling pressure, causing short-term stock prices to fall,” an analyst told Finance reporter Chen Hongjie.

After March 2026, the stock prices of state-owned big banks rebounded. Finance reporter Chen Hongjie’s statistics show that from early March to April 3, the four banks’ (ICBC, ABC, BOC, and CCB) stock price increases were between 7% and 10%.

As of the close on April 3, 2026, the price-to-book ratios of Agricultural Bank, China Construction Bank, Bank of China, and Industrial and Commercial Bank had declined from last year’s peaks. However, they still remained in relatively good positions among listed banks: 0.87x, 0.71x, 0.70x, and 0.69x, respectively.

“Returning” of state-owned big banks

‌Scale is a core indicator for measuring the size, influence, and operational capability of financial institutions.

By the end of 2025, ICBC’s total assets reached 53.48 trillion yuan, up more than 9% year over year, becoming the world’s first bank to break through the 50 trillion yuan mark; Agricultural Bank’s asset size exceeded 48 trillion yuan, with the highest growth among the four big banks at 12.8%; China Construction Bank’s asset size exceeded 45 trillion yuan, with growth also above 12%. Bank of China’s total asset growth rate also exceeded 9%.

From the end of 2023 to the end of 2025—just over two years—ICBC and Agricultural Bank’s asset sizes increased by nearly 9 trillion yuan each, China Construction Bank’s asset size increased by more than 7 trillion yuan, and Bank of China’s asset size increased by around 6 trillion yuan.

This stands in sharp contrast with nationwide joint-stock banks. Finance reporter Chen Hongjie’s review shows that many joint-stock banks’ total asset growth over these two years from the end of 2023 to the end of 2025 was below 10%, ranging between 2% and 9%.

In recent years, China’s banking industry has generally shown a trend of “returning” to state-owned big banks. The Central Financial Work Conference held on October 30–31, 2023 pointed out even more clearly that improving institutional positioning, supporting state-owned large financial institutions to become better and stronger, and serving as the main force for serving the real economy and a “stabilizing weight” for maintaining financial stability.

In terms of revenue and profit, the big banks—ICBC, ABC, BOC, and CCB—have all achieved double-digit year-on-year growth on both fronts, demonstrating strong operating resilience: in 2025, they combined to achieve revenue of 2.98 trillion yuan, and combined to achieve net profit attributable to shareholders of 1.24 trillion yuan.

Among them, Agricultural Bank led in 2025 with a 3.18% year-on-year growth rate in net profit attributable to shareholders. “Operating income has maintained positive growth for two consecutive years, and net profit growth has ranked ahead of comparable peers for six consecutive years,” management of Agricultural Bank said recently.

Capital is the core guarantee for banks to withstand risks, maintain operations, and achieve development‌. For state-owned big banks, capital can be replenished through the national fiscal system. Currently, among the six major state-owned banks, Bank of China and China Construction Bank, among others, completed the first round of capital injections in 2025, raising a total of 520 billion yuan, of which the Ministry of Finance contributed 500 billion yuan.

The 2026 Government Work Report has explicitly proposed issuing 3,000 billion yuan of special treasury bonds‌ to support state-owned large commercial banks in replenishing capital. This marks the formal launch of the second round of capital replenishment for state-owned big banks.

“Expect that in the near term, capital replenishment plans for the other two big banks (Industrial and Commercial Bank and Agricultural Bank) will be advanced. In terms of allocation of scale, the injection size is expected to be larger for banks that are more in need of capital. In terms of issuance pricing, it is expected that the issuance price will still be between the market price and 1x PB.” Analysts said. In terms of timing and pace, it is expected to be similar to the pace of advancing the first batch of four big banks. In the long run, supplementing state-owned big banks with core Tier 1 capital will help strengthen their capital strength, improve their risk-resistance capability and credit expansion capability, thereby better achieving long-term and sustainable growth.

In addition, state-owned big banks have also performed relatively well in dividends, with dividend payout ratios consistently stable at 30% and above. Taking ICBC as an example, since its listing in 2006, it has cumulatively created cash dividend returns for shareholders of 1.58 trillion yuan, firmly ranking first in the total A-share dividend amount. From the dividend yield perspective, between 2023 and 2025, the average dividend yields of ICBC’s A-shares and H-shares were 5.22% and 7.29%, respectively.

These return rates are far higher than comparable investment products and wealth management products. Data shows that in 2025, wealth management products generated returns of 730.3 billion yuan for investors across the year, with average yield of 1.98%. Compared with 2024’s 2.65%, this represented a decline of 67 basis points, the first time it fell below 2%.

Integrated operations and technology-driven future

For many years, China’s banking industry relied on accommodative monetary policy, stable interest spreads, and sustained robust credit demand to achieve years of sustained high growth, taking operating scale and profitability to new heights. But with the arrival of the low-interest-rate era, the banking industry is about to be reshaped.

Another industry figure told Finance reporter Chen Hongjie that they are not so much worried about banks’ asset quality, but instead more concerned about whether banks can maintain profit growth in the new economic environment. Data shows that in Q4 2025, commercial banks’ non-performing loan ratio fell to 1.50%, and the non-performing ratios of the four major banks were all at or below 1.31%.

One important factor affecting bank competitiveness is technology. Data shows that in 2025, Industrial and Commercial Bank of China’s investment in financial technology was 28.588 billion yuan; Agricultural Bank’s investment in information technology was 25.647 billion yuan; Bank of China’s investment in financial technology (domestic regulatory scope) was 25.001 billion yuan, accounting for 3.80% of operating revenue; and China Construction Bank’s investment in financial technology was 26.722 billion yuan, accounting for 3.51% of operating revenue.

From the perspective of net interest margin, as of the end of 2025, Agricultural Bank’s net interest margin was 1.28%, down 14 basis points; Industrial and Commercial Bank’s net interest margin was 1.28%, with the decline continuing to narrow; China Construction Bank’s net interest margin was 1.34%, with the annual decline narrowing by 2 basis points year over year; and Bank of China’s net interest margin was 1.26%, staying stable for two consecutive quarters in the second half of 2025.

“Although there are signs that net interest margins have stabilized, in the long run, a commercial model that relies on traditional deposit-and-loan interest spread is not sustainable.” A senior industry figure said. “Banks that shift toward diversified returns will win in the next cycle.”

Multiple bank executives also mentioned “doing a good job in comprehensive, end-to-end, and full-cycle services” at earnings release conferences held recently. For example, senior executives of Agricultural Bank said that based on the advantages of “all-license coverage” across investing, lending, bonds, leasing, and advisory, they would fully leverage the role of AIC services as the national team for equity investments in technological innovation, deepen cooperation with government agencies, research institutes, venture capital firms, and other financial institutions, and meet enterprises’ needs for comprehensive financial services.

Liu Jun said that the primary goal is to expand comprehensive services, and non-commercial business should play an important supporting role… around key areas such as building a modern industrial system, technological innovation, green transformation, and coordinated regional development, they will strengthen multi-business synergy and coordination across areas including commercial banking, investment banking, asset management, custody, wealth management, trading, and settlement. They will enhance global integrated operations and mobilize resources across both markets.

In Liu Rongfa’s view, to achieve the fundamental shift from a “product-oriented” approach to a “customer-oriented” approach, it is necessary to upgrade from simply selling financial products to providing all-round financial solutions, and to advance from standardized services to private customized services. By deeply integrating into the customers’ value chain and tightly binding with the growth of customer interests, they will realize their own value while helping customers develop and serving the progress of the economy and society.

“International first-tier banks have a high degree of diversification in their profit models. At the same time, they sit at the very top of the global financial transaction industry chain, with absolute advantages in key areas such as product R&D, risk control, trading, and sales. This enables them to generate continuous excess returns, which have a high level of market recognition and are concentrated and reflected in stock prices.” A senior industry figure believes that when looking at globally renowned large banks, each has its own areas of competitive advantage, and those competitive advantages are formed through decades of continuous innovation and cultivation.

In Wang Jian’s view, Chief Analyst for the financial industry at Guosheng Securities Economic Research Institute, state-owned big banks are increasingly showing their unique strategic position and long-term allocation value: China’s industrial upgrading is driving financial institutions’ operating models toward comprehensive and internationalized operations; meanwhile, the leapfrog development of financial technology is pushing financial institutions toward digitization. Relying on advantages in licenses, clients, funding, and brands, big banks have incomparable strengths in building comprehensive, international, and digital capabilities. The high dividend yield and low volatility characteristics of state-owned big banks are not only well aligned with the stable allocation needs of individual investors, but also naturally aligned with the allocation standards for long-term institutional investors in the new era, such as social security funds, insurance funds, public funds, and bank wealth management.

In recent years, insurance funds have frequently increased their holdings in banks. Even in 2025 alone, there were dozens of such instances. “Currently, the policy framework has already proposed that it may be possible to explore insurance capital’s participation in capital replenishment for banks. This is beneficial for both sides, and in the future there will be more cooperation between the two.” An asset management professional said.

“From a long-term perspective, focusing on the long-term allocation value of state-owned big banks is one of the best options for funds with low risk appetite,” said Lü Xiuhua, an analyst at Huaxi Securities. “In the short term, it is necessary to avoid negative factors such as economic downturn, credit contraction, and exposure to risk events, and to do a good job with swing trading operations and risk control.”

Editor-in-charge | Zhang Shengting

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