Since the launch of the "September 24" market rally in 2024, banking stocks have undoubtedly emerged as one of the most outstanding sectors in the A-share market.

Wind data shows that as of the close on September 24 this year, the CSI Banking Index has accumulated gains of approximately 24% over the past year. Before the recent correction, the CSI Banking Index climbed steadily, once touching a new high of 8570.76 points, representing an increase of over 43% compared to September 24 last year.

During this period, several landmark events occurred in the banking sector. First, the A-share market capitalization of the banking sector exceeded 10 trillion yuan for the first time. Second, Agricultural Bank of China's A-share market cap and total market cap successively surpassed Industrial and Commercial Bank of China (ICBC), ascending to the throne of "market cap king," though ICBC later reclaimed its position as the "universe bank." However, since July, market trading styles have shifted, and banking stocks have gradually entered a phase of volatile correction, with the sector falling nearly 13% from its peak while the Shanghai Composite Index rose over 10% during the same period.

**Half Post Gains Exceeding 30%, "Market Cap King" Completes a Round of Succession**

Since the launch of the "September 24" rally last year, the banking sector has experienced an overall pattern of initial rise followed by decline, but performance among banks has shown significant differentiation. Over the past year, all 42 A-share banking stocks posted gains, with stock price increases ranging from nearly 59% at the highest to around 8% at the lowest.

Specifically, over the past year, 36 banking stocks posted gains exceeding 20%, 23 stocks gained over 30%, 5 stocks rose over 40%, and 2 stocks increased by more than 50%. Among them, Qingdao Bank (58.87%), Xiamen Bank (50%), and Agricultural Bank of China (48.6%) ranked in the top three for gains. In comparison, Bank of Nanjing (13.42%), Huaxia Bank (11.20%), and Bank of Communications (8.38%) lagged behind their peers in terms of gains.

By bank type, the median gain for state-owned major banks was approximately 29%, with Agricultural Bank of China, ICBC, and Postal Savings Bank leading with gains of 48.6%, 36.08%, and 33.57% respectively. Joint-stock banks had a median gain of about 26%, with Shanghai Pudong Development Bank, China Merchants Bank, and CITIC Bank leading with gains of 45.89%, 37.33%, and 28.33% respectively. City commercial banks had a median gain of around 36%, with Qingdao Bank, Xiamen Bank, and Bank of Jiangsu leading with gains of 58.87%, 50%, and 40.28% respectively. Rural commercial banks had a median gain of around 32%, with Chongqing Rural Commercial Bank, Jiangyin Bank, and Qingdao Rural Commercial Bank leading with gains of 39.32%, 36.46%, and 35.17% respectively.

As of the close on September 24, the total A-share market capitalization of the 42 listed banks was approximately 10.6 trillion yuan, an increase of 2.37 trillion yuan from 8.23 trillion yuan a year ago. Total market capitalization reached 13.9 trillion yuan, an increase of over 3 trillion yuan from 10.83 trillion yuan a year ago.

One highlight of this rally was the rapid rise of several state-owned major banks with the largest market capitalizations, particularly Agricultural Bank of China, which climbed steadily. First, its A-share market cap surpassed ICBC, and later its total market cap also once exceeded ICBC, becoming the new "universe bank."

Looking at the latest closing situation, the current top 5 A-share listed banks by A-share market cap are Agricultural Bank of China (2.1 trillion yuan), ICBC (2.01 trillion yuan), Bank of China (1.26 trillion yuan), China Merchants Bank (852.388 billion yuan), and Postal Savings Bank (607.448 billion yuan). In terms of total market cap, with market adjustments, ICBC has reclaimed its position as the "universe bank" with a latest total market cap of 2.47 trillion yuan, while Agricultural Bank of China stands at 2.24 trillion yuan. The other three banks with total market caps exceeding one trillion yuan are China Construction Bank, Bank of China, and China Merchants Bank.

Which banks saw the largest market cap increases? Wind data shows that from September 24 last year to date, eight banks saw their A-share market cap increases exceed 100 billion yuan, with the top four all being state-owned major banks. Agricultural Bank of China and ICBC saw their A-share market caps increase by approximately 565.1 billion yuan and 396.3 billion yuan respectively, while Bank of China and Postal Savings Bank also both saw A-share market cap increases exceeding 200 billion yuan.

In terms of total market cap increases, Agricultural Bank of China and ICBC led with approximately 604.6 billion yuan and 485.8 billion yuan respectively. Although China Construction Bank's A-share market cap only increased by 111.7 billion yuan, benefiting from a higher proportion of H-shares and better H-share performance, its total market cap also increased by nearly 470 billion yuan.

**Entering Correction, How to View the "Seesaw" Effect**

Since July, with rising market sentiment and sector rotation, banking stocks have generally entered a correction phase, but with some differentiation trends.

Wind data shows that since the July 10 peak, the CSI Banking Index has corrected nearly 13%. Since September alone, the CSI Banking Index has fallen over 5%.

Looking at individual stock performance, since July 10, more than half of the banks have corrected by over 10%, with China Everbright Bank and Bank of Beijing falling over 20%, while Zheshang Bank, Huaxia Bank, and over ten other stocks have fallen more than 15%. Only two banking stocks posted gains: Agricultural Bank of China and Postal Savings Bank.

Under the "seesaw" effect between technology enthusiasm and dividend strategies, market disagreement about the future trend of banking stocks has increased, with noticeably more discussion about whether banking stock prices have "risen too much" and whether the banking stock rally has ended.

However, seasoned investment professionals have indicated that today's banking stocks are vastly different from those of 10 years ago, with the biggest change being the gradual defusing of "landmines" in the real estate industry, with the most dangerous phase now behind us. These professionals emphasize that the key to judging whether banking stocks are expensive lies in valuation, not short-term gains. Compared internationally, reasonably valued domestic banks of good quality should have price-to-book ratios of around 1-1.5 times.

Based on the latest closing prices, the current median dividend yield for banking stocks is around 4.5%, down more than 1 percentage point from a year ago, but still offering significant advantages over other asset returns. In terms of price-to-book ratios, the current 42 listed banks have an average P/B of around 0.58 times, up from 0.5 times a year ago, but the universal below-book-value situation has still not been sustainably broken. Currently, China Merchants Bank has the highest P/B ratio among individual stocks (0.98 times), while China Minsheng Bank has the lowest (0.32 times).

(Note: Total market cap calculation includes A-share latest price × A-share total shares + H-share latest price × H-share total shares × real-time exchange rate; A-share market cap calculation uses A-share latest price × A-share total shares)