Real Estate Market Bottom Timing & Bank Stock Valuation Repair Analysis

Based on the market background information you provided, I will conduct an in-depth analysis of the timing of the real estate market bottom and the impact mechanism of bank stock valuation repair from the perspective of the difference between rent return rate and loan interest rate.

According to the data you mentioned, the national 100-city rent return rate of 2.37% has approached the provident fund interest rate of 2.6%, and the narrowing of this difference has key indicator significance:

1. Investment Value Critical Point
   : When the rent return rate approaches or exceeds the financing cost, the investment value of real estate begins to emerge
2. Market Bottom Signal
   : Historically, the narrowing of the difference between rent return rate and interest rate has often been an important leading indicator of housing prices hitting bottom
3. International Comparative Advantage
   : After deducting holding costs, China’s rent return rate is not low compared to international markets, supporting the bottom of housing prices

:

• Rent return rate continues to approach the interest rate, and the difference further narrows
• Market sentiment hits bottom, and transaction volume begins to stabilize and rebound
• Policy support is increased, such as measures like interest subsidies [1]

:

• Rent return rate begins to exceed financing costs, forming positive cash flow
• The decline in housing prices narrows significantly, and some cities take the lead in stabilizing and rebounding
• Banks’ risk assessment of real estate begins to improve

:

• Form a healthy pattern where the rent return rate is stably higher than the interest rate
• The real estate market enters a new balanced state
• The asset quality of banks is substantially improved

From the data of Industrial and Commercial Bank of China (ICBC, 601398.SS) and Ping An Bank (000001.SZ), we can see:

:

• P/B ratio of 0.70x, significantly lower than the book value of 1x
• ROE is 9.13%, and net profit margin is as high as 33.15%
• It has risen by 14.56% since the beginning of this year, but there is still room for valuation repair

:

• P/B ratio of 0.48x, with cheaper valuation
• ROE is 8.72%, and net profit margin is 19.21%
• Recent performance is relatively weak, but it has the potential for an oversold rebound

1. Expectation of Asset Quality Improvement
   :
   • The stabilization of the real estate market will directly improve the asset quality of banks
   • Non-performing loan ratio stabilizes, and provision pressure eases
   • From the data of Hong Kong banks, the non-performing loan ratio has approached a relatively high level of 2% [2]

2. Relief of Interest Spread Pressure
   :
   • After the real estate market stabilizes, banks’ risk premium requirements for related loans decrease
   • The overall credit environment improves, which is conducive to the stability of interest spreads

3. Recovery of Market Confidence
   :
   • As a pillar of China’s economy, the stabilization of real estate will drive the improvement of overall economic expectations
   • As a representative of value investment, bank stocks will be favored by capital

:

• Focus on large state-owned banks with extremely low valuations
• Large banks like ICBC have stronger risk resistance capabilities
• Build positions in batches to control risks

:

• Increase positions in bank stocks to enjoy the dividend of valuation repair
• Pay attention to the flexible performance of joint-stock banks
• Allocate some city commercial banks to enjoy regional recovery

:

• Hold high-quality bank stocks to enjoy long-term value return
• Pay attention to the dividend income of bank stocks

1. Closely monitor changes in rent return rate
   , which is a key leading indicator
2. Track real estate transaction volume data
   to confirm the real stabilization of the market
3. Monitor bank asset quality indicators
   to ensure sustainable improvement of fundamentals
4. Diversify investments
   to avoid over-concentration in a single bank stock

The narrowing of the difference between rent return rate and loan interest rate is an important signal of the real estate market hitting bottom, and it also provides fundamental support for the valuation repair of bank stocks. Currently, bank stock valuations are generally at historical lows. Once the stabilization of the real estate market is confirmed, bank stocks will face the dual driving forces of valuation repair and performance improvement. Investors should closely monitor changes in relevant indicators and seize this historic investment opportunity.

---

[0] Jinling API Data
[1] Yahoo Hong Kong News - “Morgan Stanley Expects Mainland China to Spend 400 Billion Yuan Annually on Interest Subsidies” (https://hk.finance.yahoo.com/news/大摩料內地補貼按息-年斥4000億-183600169.html)
[2] Bloomberg News - Analysis Related to China’s Real Estate Market Crisis (https://www.bloomberg.com/news/articles/2025-12-12/china-s-vanke-on-brink-signaling-renewed-property-crisis)