State-owned major banks serve as the "ballast" of the market, with Agricultural Bank of China rising over 3%! The Baohua (512800) billion-yuan bank ETF climbs steadily, exceeding 10% in March.

On April 2nd, the three major A-share indices weakened, while the banking sector outperformed throughout the day, rising against the trend. The intra-day price of the top-flow bank ETF Huabao (512800) once increased by 0.75%, closing up 0.37%, climbing steadily on the daily chart and approaching the half-year moving average.

The operating results of the major state-owned banks for 2025 have been fully announced. Amidst the industry-wide trend of narrowing net interest margins, the six largest banks achieved positive growth in asset size, operating income, and net profit attributable to shareholders. The total net profit attributable to shareholders for the year reached 1.42 trillion yuan, with total cash dividends exceeding 420 billion yuan. With a stable dividend payout ratio of 30% and a dividend yield of around 4%, they serve as core weight stocks in A-shares and market stabilizers.

Today, the major state-owned banks continued their impressive performance, with Agricultural Bank leading with over 3% gains. China Construction Bank, Postal Savings Bank, Bank of China, and Bank of Communications rose more than 1%, while Industrial and Commercial Bank of China followed suit. Additionally, Yunnan Rural Commercial Bank, Huaxia Bank, and Shanghai Rural Commercial Bank saw notable gains.

Geopolitical conflicts have increased volatility in the equity markets and triggered risk-averse sentiment among investors. In this context, defensive sectors characterized by high dividends, low valuations, and low volatility have demonstrated their allocation value. In March, the CSI Bank Index rose by 3.83%, the highest among all secondary industry indices of the CSI All Share Index. During the same period, the Shanghai Composite Index, ChiNext Index, and Shenzhen Component Index declined by 6.51%, 3.79%, and 7.02%, respectively, with the banking sector outperforming the Shanghai Composite by 10.34%.

Note: The five-year cumulative gains/losses of the CSI Bank Index are: 2025, 6.79%; 2024, 34.71%; 2023, -7.27%; 2022, -8.78%; 2021, -4.41%. The index’s constituent stocks are adjusted periodically according to the index compilation rules. Past performance does not predict future results.

Currently, Yangtze Securities states that, in an environment where market risk appetite is systematically decreasing, the defensive value of the banking sector, which has been adjusted for three quarters, is prominent. The sector is near its relative lows from early October last year and late January this year, offering a margin of safety. Additionally, low PB-ROE valuations, improving earnings trends, and gradually digesting pressure from index funds and other capital flows support this view.*

Galaxy Securities believes that the rising risk aversion in the short term benefits the allocation value of the banking sector. Future recovery is expected to come more from fundamental improvements, with earnings resilience in 2026 likely to further release. In an environment of low interest rates and accelerated inflows of medium- and long-term funds, the high dividend and low valuation attributes of the banking sector continue to attract long-term capital such as insurance funds.*

The Bank ETF (512800) and its associated funds (Class A: 240019; Class C: 006697) passively track the CSI Bank Index, which includes 42 listed banks in A-shares. They are efficient investment tools for tracking the overall trend of the banking sector. The latest size of the Bank ETF (512800) is nearly 12 billion yuan, with an average daily trading volume exceeding 800 million yuan since 2025, making it the largest and most liquid among the 10 banking ETFs in A-shares!

Data source: Shanghai and Shenzhen Stock Exchanges, etc.

Institutional views sourced from: Yangtze Securities 20260330 “2025 Large Bank Net Interest Margin Stabilization — Weekly Banking Industry Tracking Week 12 of 2026”; Galaxy Securities 20260329 “Impact of US-Iran Conflict on the Sector is Controllable, Risk Aversion Rising.”

ETF fee-related notes: When investors subscribe or redeem fund shares, the subscription/redemption agent may charge a commission of up to 0.5%, including related fees charged by stock exchanges, registration agencies, etc. Fee details for associated funds: Huabao CSI Bank ETF (A class) subscription fee (front-end) is 1,000 yuan per transaction for subscriptions of 2 million yuan or more, 0.6% for 1-2 million yuan, and 1% for less than 1 million yuan; redemption fee is 1.5% if held less than 7 days, 0.5% for 7-180 days, 0.25% for 180 days to 1 year, and 0% for over 1 year, with no sales service fee. Huabao CSI Bank ETF (C class) has no subscription fee, but redemption fee is 1.5% if held less than 7 days, 0% otherwise; sales service fee is 0.4%.

Risk warning: The Bank ETF passively tracks the CSI Bank Index, which has a base date of December 31, 2004, and was published on July 15, 2013. The composition of index constituents is adjusted periodically according to the index rules. Past performance does not predict future results. The constituent stocks shown are for display only; descriptions of individual stocks do not constitute investment advice and do not reflect holdings or trading activity of any funds managed by the issuer. The risk level of this fund, as assessed by the fund manager, is R3—medium risk, suitable for balanced (C3) and above investors. All information in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, or any form of statement) is for reference only. Investors are responsible for their own investment decisions. The views, analyses, and forecasts in this article do not constitute investment advice and the issuer is not responsible for any direct or indirect losses resulting from the use of this content. Fund investments carry risks; past performance does not guarantee future results. The performance of other funds managed by the issuer does not guarantee the performance of any specific fund. Please invest cautiously.