AIC business is beneficial for banks to participate in the technology narrative, and the valuation of bank stocks still has room for improvement. The advantages of comprehensive operations for state-owned and joint-stock banks are expected to strengthen. The year 2026 marks the beginning of the "15th Five-Year Plan," representing a "fresh start" for bank stocks, with a primary recommendation for the "new momentum portfolio." Banks possessing new growth drivers within this portfolio are anticipated to achieve more substantial value restoration. This can be viewed from two dimensions: (1) Building a foundation with large banks for a financially strong nation. (2) Enhancing ROE through the advancement of small and medium-sized banks. Additionally, recommendations include stocks poised for a turnaround from困境 and those that have cleared存量 risks. The main views of Zheshang Securities are as follows:

What business models do AIC companies have? AIC business models can be categorized into several types: market-oriented debt-to-equity swaps, dual-General Partner (GP) models, parent-child fund structures, investment-loan linkage, and direct equity investments. State-owned banks frequently collaborate with local state-owned capital, with numerous examples of dual-GP fund matrices and parent-child fund models. Joint-stock banks, established later, have primarily participated in deals involving direct equity investments and investment-loan linkage this year. State-owned bank AICs invest across a broad range of sectors, encompassing both traditional and emerging industries, whereas joint-stock bank AICs mainly focus on emerging fields like new energy and new materials.

What is the profitability status of AIC companies? (1) Currently, the "profitability" is not significantly higher than that of their parent banks: The average ROE for the five major state-owned banks' AIC companies was 11.35%, 10.49%, and 7.15% for 2023A, 2024A, and the first half of 2025, respectively, not consistently and significantly exceeding their parent banks. If considering the cost of capital as an opportunity cost, the annualized return on equity investments by AICs would need to reach at least 20% to cover the capital cost (RWA=1250%, NPL formation rate=1.50%). (2) The future prospects for returns on equity investments are promising. Taking CMB AIC's investment in Shenlan Auto as an example, if valued with reference to new energy vehicle companies and subsequently achieving a successful IPO, the investment return for the AIC could be considerable.

What impact do AICs have on bank valuation? The establishment of AICs enables traditional banks to participate in the technology narrative, potentially leading to an uplift in bank valuations. Referencing the case of Silicon Valley Bank, its average P/B ratio over a decade was 2.29, higher than the average for the top four US banks (1.06); its peak valuation reached 4.17 times P/B.

What impact do AICs have on the competitive landscape? Joint-stock banks are expected to benefit the most. Joint-stock banks possess a market-oriented DNA and a solid foundation for comprehensive operations. State-owned banks bear the responsibility of supporting major national projects, suggesting their risk approval processes will likely be more cautious. City and rural commercial banks may adhere to the regulatory stance of "returning to their origins," potentially facing some difficulty in obtaining licenses. Risk提示: Economic slowdown, significant surge in non-performing loans, data calculation errors.