New Cosmic Journey: Agricultural Bank’s “Operating Code”

``` Since 2025, Agricultural Bank of China (ABC) has become a "shining pearl" among A-share listed banks, at one point surpassing "the universe bank" ICBC to take the top spot in total market value. What is the logic behind ABC's strong performance? Recently, Tianfeng Securities systematically summarized ABC's core competitive advantages in a special research report, arguing that ABC's outstanding performance is not accidental, but the inevitable result of its long-term deep cultivation of a county-level financial strategy. The report states that the research team attributes ABC's success to its unique "operational code"—the strategic combination of the "Three Good Formula + Four Highlights." The report particularly emphasizes that against the current backdrop of "asset shortage," ABC's growth potential and risk resistance capability give it a clear path to continued valuation improvement. "ABC will continue on its road to valuation improvement under dual logic: first, the dividend attribute still attracts mid-to-long term funds; second, it enjoys large-bank-leading growth prospects." Tianfeng Securities has given a "Buy" rating, predicting that ABC's net profit attributable to parent in 2025–2027 will grow year over year by 1.98%, 3.94%, and 4.63%, demonstrating solid profitability expectations. "Three Good Formula": Core Logic of Strategic Success Strategic Layout: Forward-Looking County-Level Financial Strategy ABC's strategic advantage is first embodied in its forward-looking, visionary county-level layout. As early as its IPO, ABC accurately predicted huge development potential for county economies amid urbanization and policy support. Tianfeng Securities notes in the report: "ABC fully implements three major strategies — inclusive finance for agriculture, green finance, and digital operations, with county-level finance ranked first." This strategic positioning aligns with the country's increasing emphasis on county economies in recent years. From the 2020 "Notice on Accelerating County-Urbanization Weakness-Remedy Work" to the 2025 government work report's call to "vigorously develop county economies," policy support strongly backs ABC's strategy. ABC's strategy is also "rooted in its endowments," fully leveraging its deep "agriculture, rural areas, and farmers" (Sannong) gene. Since the founding of Agricultural Cooperative Bank in 1951, ABC has always been closely tied to rural financial development. By the end of 2009, ABC's county-level outlets already covered 99.5% of China’s county-level administrative regions, laying the foundation for today's success. Execution Assurance: Triple Advantages to Guarantee Strategy Delivery The success of ABC’s strategy implementation comes from its "Three Good Assurances": - First is a steadfast, excellent management team. Current Chairman Gu Shu possesses overall management capability for large financial institutions and once served as the youngest president of ICBC among major state-owned banks. The current president Wang Zhiheng has rich business and management experience, having risen from the grassroots. - Second is an innovative and comprehensive organizational structure. Through a vertical management model—the Sannong Financial Business Department—ABC has achieved the "Six Separates" management mechanism, including separate credit management, capital management, accounting, etc., ensuring resources favor county business. - Finally, precise and effective business strategies. ABC adopts a differentiated branch network layout, focusing on the central and western regions, with 53% of outlets there—far higher than other major banks. Meanwhile, it uses a government-bank cooperation risk control model and FinTech empowerment to effectively reduce the operation cost and risk in county-level finance. Operational Results: Comprehensive Leadership in Three Dimensions "Good strategy" and "good execution" ultimately turn into "good operational" results. ABC's business advantage is reflected in three areas: - First, “a solid client base.” By mid-2025, ABC served 888 million individual clients and had an average onshore RMB deposit balance of 30.57 trillion yuan—both ranking first among comparable peers. - Second, "specialized business acceleration." The revenue contribution from county-level finance rose by 11.8 percentage points since 2019 to 49.4%, making it a major profit driver. - Third, "stronger earnings resilience." In the first half of 2025, ABC was the only one among the Big Three banks to achieve positive growth in all three key indicators: revenue, pre-provision profit, and net profit attributable to the parent. Four Highlights: Demonstrating Competitive Advantage Tianfeng Securities believes that the "Three Good Formula" translates fundamentally into four highlights: credit, net interest margin, asset quality, and provisions. Broad Credit Growth Space: Tianfeng analysts believe that benefiting from the potential release of county economies and deep strategic layout, ABC has much greater future credit growth space than its peers. Since 2021, ABC’s credit growth rate has consistently outpaced peers, with loan growth of 9.6% YoY by mid-2025. County loans have played an increasingly leading role as the main engine. By mid-2025, county loan balances held at 10 trillion yuan, with the proportion of total loans up 4.1 percentage points from end-2021 to 40.4%. The report states: "County loan growth continues to outpace the overall bank by 2–5 percentage points, accounting for over 50% of the increase." In terms of credit structure, ABC displays a distinct focus on serving agriculture, rural areas, and farmers: the proportion of manufacturing loans and individual business loans both rank first among peers, while exposure to real estate is relatively low. Relative Net Interest Margin Resilience: ABC demonstrates clear advantages in liability cost control. In the first half of 2025, its proportion of personal demand deposits was 23%, much higher than ICBC's 18.6% and CCB's 20.7%. This advantage mainly stems from its customer profile. The report analyzes: "ABC focuses on serving county and rural personal customers, who are less sensitive to interest rates and have high-frequency fund flows, making them more inclined to choose demand deposits compared to customers in developed regions." With such clients, ABC naturally enjoys strong pricing power. Retail clients' average deposits are small and have little bargaining power, so standard interest rates apply, while ABC’s dominant county-level market position further strengthens this advantage. Outstanding Asset Quality: On asset quality, ABC has maintained a low non-performing loan (NPL) ratio under strict recognition. By mid-2025, its NPL ratio was 1.28%, 5 basis points lower than ICBC and CCB, and its overdue-to-NPL ratio was 95.11%, the lowest among peers. More importantly, ABC's share of real-estate related loans is the lowest, so it’s less affected by the continued exposure of real estate risks. Both its corporate real estate loan scale/ratio and mortgage loan scale/ratio are lowest among peers. The report notes: "Because ABC has long cultivated a small, dispersed county financial market, its participation in real estate business is less than peers, so it is relatively less affected in this round of risk exposure." Adequate Provision Cushions: ABC's provision coverage ratio has remained high for a long time, reaching 295% by mid-2025, far exceeding peers. Since 2022, the ratio has stayed around 300%, on average about 90 and 60 percentage points higher than ICBC and CCB respectively. According to the regulatory bottom line of 150%, by mid-2025 ABC’s excess loan provisions reached 494.8 billion yuan, maintaining industry leadership. This provides an ample safety cushion for risk mitigation and profit feedback. Valuation Improvement Logic: Dual Drivers, Sustainable Looking ahead, Tianfeng Securities believes that ABC will continue valuation improvement along two lines of logic. First is the sustained attraction of dividend attributes. Amid low interest rates and "asset shortage," as of September 9 close, ABC's dividend yield (TTM) was still 3.35%, which is highly attractive to mid-to-long term capital. More importantly, there are growth prospects. With ongoing intensification of the county-level finance strategy, ABC has big-bank-leading growth prospects. Supported by unleashed credit potential, resilient net interest margin, low NPL and high provisions, performance will become an important driver for further valuation improvement. Risk Alert and Disclaimer The market involves risk; investments require caution. This article does not constitute individual investment advice, nor does it take into account any particular user's specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investments made accordingly are at your own risk. ```