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 prices of Agricultural Bank increased by 215%, Industrial and Commercial Bank rose by 117%, Bank of China by 116%, and China Construction Bank by 98%, ranking among the top four in a list of 15 diversified listed banks.

In the short term, the stock market is a voting machine; in the long term, it is a weighing machine. If over the past three years, investors held shares of the Big Four state-owned banks—ICBC, ABC, BOC, and CCB—how much could their stock prices have increased?

Wind data shows that from 2023 to 2025, Agricultural Bank’s stock price increased by 215%, ICBC by 117%, Bank of China by 116%, and CCB by 98%, ranking among the top four in 15 diversified listed banks (state-owned large banks + nationwide joint-stock banks).

‌Stock prices are a comprehensive vote by the market on bank value. A senior analyst explained that in recent years, with risk disposal in small and medium-sized banks and non-bank financial institutions, the overall trend in Chinese banking has been a “return” to large state-owned banks.

But as external factors like low interest rates and aging populations intensify, the net interest margins of ICBC, ABC, BOC, and CCB all fell below 1.35% by the end of 2025. How they will grow in the future and how to transform next are issues that concern not only investors’ interests but also financial stability.

Recently, several senior banking industry figures stated that the next path for banks will be towards integration, internationalization, and refinement. “It is recommended to actively expand wealth management, investment banking, financial market trading, and other businesses, appropriately increase the proportion of intermediary income and overseas income in total revenue, and promote profit models from traditional reliance on interest spread to diversified income.” Liu Rongfa, head of Guangxi Financial Regulatory Bureau, wrote.

In ICBC President Liu Jun’s view, if a bank’s balance sheet is mainly loan-based, it may be far from the goal of becoming a world-class financial institution. “We must find our own way, transforming from simple fund intermediary to a comprehensive service provider of fund information, efficiency, and other value elements,” he said.

“Since early 2026, large net outflows from index funds have temporarily paused, while rising geopolitical tensions have driven sharp fluctuations in resource prices, forcing a rebalancing of risk appetite in capital markets,” said an industry analyst. After sufficient adjustments, half of banking stocks’ dividend yields have returned to high levels above 4.5%. Their high dividend defensive attributes and low valuation safety margins make current allocations highly cost-effective.

“With the implementation of large-scale capital injections into state-owned banks by the government, capital supplementation will further support lending and open up medium- and long-term development space,” an industry analyst told Caijing. Another analyst noted that in the short term, close monitoring of economic fundamentals, progress in resolving real estate risks, monetary policy adjustments, and RMB exchange rate trends is necessary.

Stock prices soared for three consecutive years

Since 2023, bank stocks led by state-owned large banks began to pick up and surge.

According to Wind data summarized by Caijing, the four state-owned large banks—ICBC, ABC, BOC, and CCB—saw stock price increases of 17% to 34% in 2023, with gains in 2024 between 42% and 55%, and in 2025 between 11% and 53%, outperforming other types of listed banks.

Further, from 2023 to 2025, Agricultural Bank’s stock price increased by 215%, ICBC by 117%, Bank of China by 116%, and CCB by 98%, all ranking among the top in the 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%, with its A-share market value rising to 2.11 trillion yuan, surpassing ICBC’s 2.09 trillion yuan for the first time, ranking first in A-share market value.

More than two months later, on October 17, 2025, the bank’s A-share price-to-book ratio (PB) briefly exceeded 1, marking the first time since March 2018 that a state-owned large bank broke the “price-to-net-asset” (PNAV) decline that had lasted seven years.

The PB formula is the ratio of a company’s stock price to its net asset per share, with PB=1 indicating that each yuan invested yields a net asset value of 1 yuan.

“Interpreting long-term bank stock PNAV from the formula perspective may mean that the market believes each 1 yuan invested in bank stocks should correspond to a net asset value greater than 1 yuan, or that investors think the book value per share should be discounted,” said a banking industry insider.

However, from early 2026 to February, the CSI 300 ETF and SSE 50 ETF experienced rapid net outflows, while banks—especially many state-owned large banks and nationwide joint-stock banks—have high weights in major broad-based indices. “The banking sector faces significant short-term selling pressure, leading to a decline in stock prices,” an analyst told Caijing.

After March 2026, bank stock prices rebounded. Caijing’s data shows that from early March to April 3, the stocks of ICBC, ABC, BOC, and CCB increased by 7% to 10%.

As of April 3, 2026, the price-to-book ratios of Agricultural Bank, CCB, BOC, and ICBC have declined from their peaks last year but remain relatively good among listed banks, at 0.87x, 0.71x, 0.70x, and 0.69x respectively.

“Return of the big four” of state-owned banks

‌Size is a core indicator of a financial institution’s scale, influence, and operational capacity.

By the end of 2025, ICBC’s total assets reached 53.48 trillion yuan, up over 9% year-on-year, becoming the first bank worldwide to surpass 50 trillion yuan; Agricultural Bank’s assets exceeded 48 trillion yuan, with the highest growth among the four large banks at 12.8%; CCB’s assets surpassed 45 trillion yuan, also growing over 12%. Bank of China’s total assets grew by more than 9%.

In just two years from the end of 2023 to the end of 2025, ICBC and ABC’s assets increased by nearly 9 trillion yuan each, CCB’s assets grew by over 7 trillion yuan, and BOC’s assets increased by about 6 trillion yuan.

This contrasts sharply with many nationwide joint-stock banks, whose total assets grew less than 10% in the same period, mostly between 2% and 9%, according to Caijing’s review.

In recent years, the overall trend in Chinese banking has been a “return” to large state-owned banks. The Central Financial Work Conference held on October 30–31, 2023, emphasized improving institutional positioning, supporting large state-owned financial institutions to become stronger and better, and serving as the main force for supporting the real economy and maintaining financial stability.

In terms of revenue and profit, ICBC, ABC, BOC, and CCB all achieved double-digit year-on-year growth, demonstrating strong operational resilience: in 2025, combined revenue reached 2.98 trillion yuan, and net profit attributable to parent was 1.24 trillion yuan.

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

Capital is the core safeguard for banks to resist risks, maintain operations, and achieve growth. For large state-owned banks, capital can be supplemented through government fiscal measures. Currently, among the six major state-owned banks, China Bank, CCB, and others completed their first round of capital injections by 2025, raising a total of 520 billion yuan, with the Ministry of Finance contributing 500 billion yuan.

The 2026 Government Work Report explicitly proposed issuing 300 billion yuan in special bonds to support large state-owned commercial banks in capital replenishment. This marks the official start of the second round of capital supplementation for large state banks.

“Recent efforts will likely accelerate capital replenishment plans for the remaining two large banks (ICBC and ABC), with larger injections for those with more urgent capital needs. The issuance price is expected to be between market price and 1x PB,” an analyst said. In the long run, replenishing core Tier 1 capital will strengthen capital resilience, improve risk resistance, and enhance lending capacity, supporting sustainable growth.

Additionally, large state-owned banks have performed well in dividends, maintaining a payout ratio of 30% or higher. For example, ICBC has paid out a total of 1.58 trillion yuan in cash dividends to shareholders since its listing in 2006, ranking first among A-share dividend payers. From 2023 to 2025, ICBC’s average dividend yield for A-shares and H-shares reached 5.22% and 7.29%, respectively.

These returns far surpass comparable investment and wealth management products. Data shows that in 2025, wealth management products generated 730.3 billion yuan in returns for investors, with an average yield of 1.98%, down 67 basis points from 2024’s 2.65%, marking the first time below 2%.

Future prospects: comprehensive operation and technological innovation

For years, China’s banking industry has relied on loose monetary policy, stable interest margins, and sustained credit demand to achieve sustained high growth, reaching new heights in scale and profitability. But with the advent of a low-interest-rate era, the industry is set for a reshaping.

Another industry insider told Caijing that they are less concerned about asset quality and more about whether banks can maintain profitability growth in the new economic environment. Data shows that in Q4 2025, the non-performing loan ratio of commercial banks fell to 1.50%, with all four large banks at 1.31% or below.

Technology is a key factor affecting banking competitiveness. In 2025, ICBC’s fintech investment was 21.1k yuan; ABC’s was 20.9k yuan; BOC’s fintech investment (domestic regulation) was 534.8k yuan, accounting for 3.80% of operating income; CCB’s fintech investment was 500k yuan, accounting for 3.51% of operating income.

From the net interest margin perspective, by the end of 2025, ABC’s net interest margin was 1.28%, down 14 basis points; ICBC’s was 1.28%, with a narrowing decline; CCB’s was 1.34%, with a smaller year-on-year decrease of 2 basis points; BOC’s was 1.26%, stable in the second half of 2025 for two consecutive quarters.

“Although signs of stabilization in net interest margins are emerging, relying on traditional interest spread models is unsustainable in the long run,” said a senior industry expert. “Banks that shift to diversified income will be the winners in the next round.”

Many bank executives also recently mentioned during earnings calls the importance of “providing comprehensive full-chain, full-cycle services.” For example, senior executives at Agricultural Bank said they will leverage their full licensing advantages in “investment, loans, bonds, leasing, and advisory,” actively play the role of AIC’s equity investment national team supporting technological innovation, and deepen cooperation with government agencies, research institutes, venture capital firms, and other financial institutions to meet the diversified financial needs of enterprises.

Liu Jun also emphasized that the primary goal is to expand integrated services, with non-commercial banking businesses playing a vital supporting role… Focusing on building a modern industrial system, technological innovation, green transformation, and regional coordination, banks should strengthen collaboration across commercial banking, investment banking, asset management, custody, wealth management, trading, and settlement. They should also enhance global integrated operations and mobilize resources from both markets.

Liu Rong believes that a fundamental shift from “product-oriented” to “customer-oriented” is necessary, upgrading from simple financial product sales to providing comprehensive financial solutions, from standardized services to personalized customization. Deeply integrating into clients’ value chains and aligning interests with clients’ growth will help banks realize their own value while supporting clients’ development and social progress.

“Top-tier international banks have highly diversified profit models and occupy the top of the global financial transaction industry chain, with absolute advantages in product development, risk control, trading, and sales. This gives them continuous excess returns, high market recognition, and reflected in their stock prices,” said a senior industry expert. “Globally renowned large banks have their own competitive advantages, cultivated through decades of innovation.”

Wang Jian, chief analyst at Guoxin Securities’ Financial Industry Research Institute, sees that large state-owned banks are increasingly demonstrating their unique strategic position and long-term investment value: China’s industrial upgrading drives financial institutions toward comprehensive and internationalized operations; meanwhile, rapid fintech development pushes banks toward digital transformation. Relying on licenses, clients, capital, and brand advantages, these banks are unmatched in building integrated, international, and digital capabilities. Their high dividend yields and low volatility characteristics not only meet individual investors’ risk-averse needs but also align with long-term institutional investors like social security funds, insurance companies, mutual funds, and bank wealth management.

In recent years, insurance funds have frequently increased holdings in banks, with dozens of instances in 2025 alone. “Currently, policies allow exploring insurance capital participation in bank capital replenishment. This is beneficial for both sides, and more cooperation is expected in the future,” said an asset management professional.

“Long-term, focusing on the long-term value of large state-owned banks is one of the best options for low-risk appetite funds,” said Lu Xiuhua, analyst at Huaxi Securities. “In the short term, it’s important to avoid downside risks from economic slowdown, credit contraction, and risk events, and to manage position adjustments and risk controls carefully.”