China's State-Owned Banks Set for Profit Rebound Amidst Economic Challenges

China's leading state-owned banks are poised for a profit rebound this year, owing to the repricing of nearly $8 trillion worth of expiring high-rate deposits, alleviating pressure on funding costs. Analysts foresee these banks overcoming recent profit slumps, attributed to a property debt crisis and slowing economy.

Despite the threat of cost-push inflation from the Iran conflict, analysts believe repriced deposits, following steadily lowered deposit rates, will boost lender profits. This shift anticipates a revival of net interest margins by 2026, as highlighted by Zhang Yiwei of China Galaxy Securities.

Analysts predict modest growth in 2026, despite declining profits for major banks like Industrial and Commercial Bank of China. With deposit repricing mitigating margin pressure, banks are shifting focus towards technology sectors, staying resilient amid global uncertainties affecting the economic outlook.