CITIC Securities says on fundamentals it expects Q2 net interest margins to be
strong and capital markets and wealth-management activity to lift non-interest
income, keeping banks' revenue growth stable and likely nudging profit growth
higher. From an investment angle the sector extended its positive trend since
July last week but experienced large index swings amid style rotation; CITIC
expects A-share volatility to remain elevated over the next two weeks and banks'
relative performance may weaken. Nevertheless, stable operating profiles and an
ongoing macro narrative support continued full-year absolute return potential.
