1. The low valuation of banks is not unique to A-shares

In fact, it is not unique to A-shares that the banking sector is undervalued but not rising. Looking at the world, the same is true overseas. According to the statistics of Guoxin Securities (13.45, -.2, -1.47%), the low price-to-book ratio (PB) of overseas banks is not higher than that of A-share listed banks, but the P/E ratio is slightly higher than that of A-share listed banks.

There is another phenomenon that is equally worthy of attention. When we sigh that A-share banking stocks have significantly underperformed the broader market since the end of 218, we find that there is a certain convergence in the direction of the original US banking stocks. Also referring to the report data of Guosen Securities, starting from 218, the US S&P 5 bank index began to weaken relative to the S&P 5 index, and the banking sector significantly underperformed the overall market performance of the S&P 5 index.

Second, institutions have recently reduced their positions in banking stocks

At the same time, the extremely low valuation has not won the favor of institutions. Referring to the statistical results reported by TF Securities (6.47, -.14, -2.12%), the proportion of heavy positions in the banking sector in Public Offering of Fund in the first quarter of 22 is still declining. At least 7.7% in the fourth quarter of 219 fell to 4.67% in 22, and the recent high point needs to be traced back to the first quarter of 218 (7.78%).

III. Reasons

It is said that stock price performance depends on expectations for the future. Indeed, the slowdown of asset growth, the reduction of leverage ratio and, more importantly, the pressure of long-term narrowing of net interest margin in the global low interest rate environment will put the banking industry under pressure, and interest margin is the main source of income for banks ... These negative factors make the future sustainable profitability of the banking industry questioned by the market.

On the other hand, affected by the global epidemic, the economic downturn, especially the short-term downturn, has increased the pressure of bank loan repayment, which is bound to increase the fluctuation of bank asset quality. However, the overseas epidemic has not been effectively controlled, so investors have further uncertainty about the trend of the epidemic and increased their pessimistic expectations for the quality of bank assets. Although the regulatory authorities in many places have relaxed the criteria for determining the bad products of some enterprises during the epidemic period, and allowed the extension and renewal (the flower buds in Alipay have recently started to allow the extension for one month without charging extra fees), which has a certain alleviation effect on the bad products of banks, but it still failed to eliminate investors' concerns about the high uncertainty in the future.

on the other hand, due to the bank's profit (the central bank lowered the corporate financing interest rate through targeted cuts to required reserve ratios, lowering the interest rates of OMO, MLF and LPR, and special refinancing and rediscounting), according to the data of the central bank, by the end of March, the general loan interest rate had dropped by .26%. Due to the influence of factors such as the obvious concession of banks to entities), the current monetary policy of the central bank and the solidification of the structure of the bank's debt side (the bank's debt side mainly includes deposits, interbank deposits, bonds payable, central bank loans, etc., especially deposits, which makes it difficult to change the bank's business model), the overall net interest margin of banks is expected to decline greatly, which makes investors doubt the sustainability of profit growth brought about by volume premium. The reason: Although the overall credit increased by 7.1 trillion yuan in the first quarter, with a year-on-year growth rate of 12.7%, which was 1.3 trillion yuan more than that in the first quarter of 219, the bank's profits were supported; However, the rapid expansion of asset scale will not only bring challenges to the bank's capital adequacy ratio, but more importantly, it may lead to an increase in macro leverage ratio in the short term, further aggravating investors' concerns about the quality of bank assets.