Dividends Fail to Drive Premium; Valuation Divergence Among Listed Banks Worsens

More than a year has passed since the six major state-owned banks collectively announced their valuation enhancement plans. These commitments, centered on stable operations and consistent dividend payouts, have not delivered a broad rally for the banking sector and have instead intensified valuation divergence within the industry. Industry insiders note that the differentiated choices made by market capital fundamentally reflect differing assessments of banks' profitability stability, asset quality, and growth potential. Capital favoring the "bond-like" attributes of bank stocks prefers those with steady earnings and solid asset quality, while investors seeking low valuations and stock price upside focus more on the earnings growth prospects of the banking sector.

In March 2025, the six major banks jointly issued valuation enhancement plans, pledging to reward investors through stable operations and consistent dividends. As of April 15, 2026, ABC led the group with a price-to-book ratio approaching 0.9; China Construction Bank followed closely; Industrial and Commercial Bank of China, Bank of China, and PSBC all had PB ratios between 0.6 and 0.7; while BANKCOMM stood at just 0.54. Notably, compared to the time when the valuation enhancement plans were announced, the PB ratios of PSBC and BANKCOMM have actually declined rather than risen. In fact, valuation divergence is not limited to the major state-owned banks. As of April 15, all 42 A-share bank stocks traded below book value. Ningbo Bank, Hangzhou Bank, and China Merchants Bank had PB ratios above 0.9, while over ten other banks had PB ratios below 0.5. (China Securities Journal)