Analysis of the Impact of Dai Xianglong's Proposals on A-Share Bank Valuations and the Financial Industry Landscape

According to the latest data and analysis, I provide you with a

.

---

Dai Xianglong, former governor of the People’s Bank of China, clearly stated at the 2026 (30th) China Capital Markets Forum [1]:

1. Strategic Positioning
   : Large commercial banks are important forces in leveraging the hub function of the capital market and should play a role in advancing the development of the capital market.

2. Clarification of Operational Nature
   : The state’s requirement for large financial enterprises to implement “comprehensive operation” refers to operating various non-banking financial businesses through subsidiaries, which falls under “separate operation” rather than “mixed operation”.

3. Specific Proposals
   :
   • Large commercial banks should expand
     capital and human resource investments
     in non-banking financial companies
   • Large commercial banks that have not established insurance companies or trust companies should
     establish insurance companies and trust companies as soon as possible
   • Strive to expand the asset scale of insurance companies established by large commercial banks to
     among the top 10 Chinese insurance enterprises
   • Strive to achieve that by
     2035, the total assets of non-banking financial companies under the 5 large commercial banks account for nearly 10% of their total assets

4. Realistic Foundation
   : According to Dai Xianglong, by the end of 2024, the five large commercial banks had established a total of
   51 non-banking financial companies
   , which can engage in asset management, trust, insurance asset management, fund management, financial asset investment and other businesses [2].

---

Based on the latest data, A-share bank stocks are still at historically low valuation levels [3][4]:

Bank	Price-to-Book Ratio (PB)	Current Valuation Level	Upside to 1x PB
China Merchants Bank	0.98	Highest	2.04%
Agricultural Bank of China	0.97	Relatively High	3.09%
Industrial and Commercial Bank of China	0.85	Medium	17.65%
China Construction Bank	0.82	Medium	21.95%
Bank of China	0.78	Relatively Low	28.21%
Bank of Communications	0.65	Relatively Low	53.85%
Shanghai Pudong Development Bank	0.58	Lowest	72.41%

: As of the end of 2025, the total market value of the A-share banking sector was approximately , an increase of approximately for the full year [5]. However, the sector has not yet emerged from the overall PB-below-1 situation, with the PB ratios of 42 bank stocks generally below 1x.

Non-banking businesses typically have

:

• Asset management business: ROE is typically 15%-20%
• Insurance business: ROE is typically 10%-15%
• Trust business: ROE is typically 12%-18%

The target of expanding non-banking businesses to 10% of total assets as proposed by Dai Xianglong will effectively increase the overall

.

Phase	Valuation Driver	PB Upside
Short-term (1-2 years)	Policy expectations + sentiment improvement	+0.05-0.10
Medium-term (3-5 years)	Emerging contributions from non-banking businesses	+0.08-0.15
Long-term (by 2035)	Enhanced comprehensive financial service capabilities	+0.10-0.20

Many institutions believe that there is sufficient support for the continued valuation repair of bank stocks in 2026 [6]:

• CITIC Securities
  : Expects the sector’s valuation to repair to
  around 1x PB
• GF Securities
  : Allocation-oriented funds will continue to flow into the banking sector
• Zheshang Securities
  : Expected net profit growth attributable to parent companies to reach
  2.7%
  in 2026

:

1. Industrial and Commercial Bank of China (601398)
   : Non-banking business accounts for 8.5%, with a relatively complete comprehensive operation framework already established
2. China Construction Bank (601939)
   : Owns non-banking subsidiaries such as CCB Trust and CCB Fund
3. Agricultural Bank of China (601288)
   : Has relatively complete layouts including ABC Life and ABC-CA Fund Management
4. China Merchants Bank (600036)
   : Non-banking business accounts for 15.2%, with obvious advantages in wealth management

:

1. Bank of Communications (601328)
   : Non-banking business accounts for only 5.8%, with a PB of only 0.65, representing the greatest elasticity
2. Shanghai Pudong Development Bank (600000)
   : Non-banking business accounts for 12.3%, but with a PB of only 0.58

---

:

Business Segment	Current Market Share of Large Banks	Expected Market Share in 2035	Trend
Traditional Deposit and Lending Business	65%	55%	↓ Decrease
Asset Management	25%	40%	↑ Significant Increase
Insurance Business	12%	25%	↑ Significant Increase
Trust Business	8%	20%	↑ Significant Increase
Securities Business	5%	18%	↑ Obvious Increase

Large commercial banks will accelerate their entry into non-banking sectors by leveraging the following advantages:

• Customer Base
  : Vast corporate and individual customer resources
• Channel Advantages
  : Nationwide physical outlets and digital channels
• Credit Endorsement
  : Brand advantages backed by national credit
• Capital Strength
  : Sufficient capital to support business expansion

Small and medium-sized banks and non-banking institutions will face greater competitive pressure:

• Brain Drain
  : Talented professionals flow to non-banking subsidiaries of large banks
• Customer Churn
  : High-end customers are attracted by the comprehensive financial services of large banks
• Market Share
  : Market share in asset management, insurance, trust and other segments is squeezed

Dai Xianglong clearly pointed out that this is “separate operation” rather than “mixed operation”, which means [7]:

:

• Banks conduct non-banking businesses through
  independent subsidiaries
• Risk isolation
  is maintained between subsidiaries
• The regulatory framework remains
  separate regulation

:

1. First Step
   : Large banks improve the layout of insurance and trust subsidiaries
2. Second Step
   : Expand the scale of asset management and fund businesses
3. Third Step
   : Gradually penetrate into securities and investment banking sectors

---

Target	Ticker	Investment Rationale
Industrial and Commercial Bank of China	601398.SS	Leading in comprehensive operation, with complete non-banking business layout
China Merchants Bank	600036.SS	Leader in wealth management, with the highest non-banking business ratio
Bank of Communications	601328.SS	Lowest valuation, largest marginal improvement space
China Construction Bank	601939.SS	Significant synergy among subsidiaries

• Short-term
  : Valuation repair rally is expected during the policy positive news release period
• Medium-term
  : Focus on the contribution of non-banking businesses in annual and first-quarter reports
• Long-term
  : Sustained growth opportunities during the process of achieving the 2035 target

1. Policy Implementation Risk
   : The progress and intensity of policy implementation may fall short of expectations
2. Intensified Market Competition
   : Competition in non-banking business segments may compress profit margins
3. Regulatory Compliance Risk
   : Comprehensive operation may face stricter regulatory requirements
4. Economic Cycle Risk
   : A downward macroeconomic cycle may affect the development of non-banking businesses

---

Dai Xianglong’s proposals represent the regulatory expectations for the role of large commercial banks in the development of the capital market, and will have

on A-share bank valuations and the financial industry landscape:

1. Valuation Aspect
   : Valuations of large bank stocks are expected to repair, with PB returning to 1x being a high-probability event
2. Business Aspect
   : Non-banking businesses will become new growth drivers for banks, increasing overall ROE levels
3. Landscape Aspect
   : Large banks’ comprehensive operation capabilities will be enhanced, leading to higher industry concentration
4. Investment Aspect
   : Focus should be on large banks with established comprehensive operation advantages and targets with large marginal improvement space

---

[1] Sina Finance - “Dai Xianglong: Large Commercial Banks Should Play a Role in Advancing the Development of the Capital Market” (https://finance.sina.com.cn/jjxw/2026-01-11/doc-inhfxevr3921758.shtml)

[2] Shanghai Securities News - “Dai Xianglong, Former Governor of the People’s Bank of China: Leverage the Hub Function of the Capital Market to Improve the Quality of Listed Companies” (https://m.cnstock.com/commonDetail/617149)

[3] Dahe Cube - “After a 2 Trillion Yuan Market Value Increase, Is There a Bull Market for Bank Stocks?” (https://app.dahecube.com/nweb/pc/article.html?artid=258465)

[4] Securities Times - “2026 Bank Stock Outlook: Stabilizing Performance with Structural Differentiation, Institutions Optimistic About ‘A Fresh Start’” (https://www.stcn.com/article/detail/3536880.html)

[5] Yicai Global - “After a 2 Trillion Yuan Market Value Increase, Is There a Bull Market for Bank Stocks?” (https://www.cls.cn/detail/2254023)

[6] Eastmoney Securities Research Report - “2026 Banking Investment Strategy: Resonance of Profit Improvement and Capital Driving, Optimistic About the Sector’s Allocation Value” (https://pdf.dfcfw.com/pdf/H301_AP202512191803832319_1.pdf)

[7] Jinling AI Financial Database - Market Data and Industry Analysis (Based on Real-Time API Data)