The throne of bank market value is contested in cycles.
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A milestone event in the banking industry is undoubtedly the recent competition between ICBC and Agricultural Bank for the top spot in market value.
On September 4, Agricultural Bank's total market value (A+H shares) exceeded 2.55 trillion yuan, historically surpassing ICBC to become the world's largest bank by market value.
In the following days, ICBC and Agricultural Bank took turns topping the market value ranking; as of the close on September 11, after ICBC returned to the top, it expanded its lead to 18 billion yuan.
By the first half of 2025, ICBC still firmly holds the lead among the big four banks with total assets of 52.32 trillion yuan, with Agricultural Bank ranking second;
In terms of performance, ICBC ranks first in the industry with 409.082 billion yuan in revenue and 168.103 billion yuan in net profit attributable to shareholders, while Agricultural Bank is third.
The competition for the “throne” between the two still centers on changes in market value;
However, regardless of whether Agricultural Bank can challenge ICBC's long-held “market value king” position, its brief overtaking of ICBC is already a phenomenal event in the competition among major banks—after all, ten years ago, Agricultural Bank was still at the bottom among the big four, with a market value less than 70% of ICBC’s.
Agricultural Bank's catch-up with ICBC in this changing of the guard is not only the result of step-by-step advances in strategy and operations but also the manifestation of its county-level resource advantages in a contraction and narrowing net interest margin cycle in the banking industry, with these advantages fermenting during downcycles.
The rapid increase in Agricultural Bank’s market value from 2022 to 2025 came during three years when the banking sector as a whole was under pressure and facing uphill challenges.
Three years have passed, and the banking sector has yet to escape the shadow of the cycle; but the county-level finance in which Agricultural Bank has continuously “planted seeds” has taken root under pressure, perhaps becoming one of the drivers of its market value repeatedly hitting new highs today.
A Decade of Narrowing the Gap
Looking at the changes in the market value of the big four banks over the past ten years gives a more intuitive feel for today’s rapid growth in Agricultural Bank’s market value.
From 2015 to 2017, the monetization of shantytown renovation policies injected a large amount of liquidity into the market via PSL, significantly boosting the real estate boom.
During this period, the market value of the big four banks trended upward as a whole, with ICBC’s scale and growth rate in market value leading its peers by a wide margin, making it the only state-owned major bank with a market value above 2 trillion yuan;
While Agricultural Bank’s market value rose to third place, the gap with ICBC widened further. By the end of 2017, ICBC’s total market value reached 2.13 trillion yuan, 1.74 times that of Agricultural Bank.
In 2018-2019, the new asset-management regulations brought a period of pain; amid the Sino-US trade war, economic expectations declined, and investors began to worry about banks’ asset quality and profit outlooks. The big four banks’ market values fluctuated.
ICBC, far ahead, showed considerable volatility in market value; Agricultural Bank’s market value remained stable at around 1.2 trillion yuan. By the end of 2019, ICBC’s market value was 2.05 trillion yuan, 1.61 times that of Agricultural Bank.
From 2020 to 2022, the pandemic and the outbreak of real estate developer debt crises heightened market concerns over the deterioration of bank asset quality. The big four banks’ valuations fell to historic lows, with ICBC and Agricultural Bank’s market values shrinking by 27% and 21%, respectively, over three years.
After 2023, the banking sector’s valuations bottomed and rebounded. Agricultural Bank began demonstrating growth momentum significantly stronger than its peers, with a 25% increase in market value that year, far ahead of ICBC, Bank of China, and Construction Bank for the same year;
Subsequently, Agricultural Bank’s market value growth continued to accelerate. On August 6 and September 4, 2025, it surpassed ICBC in both A-share circulating market value and total A+H market value, becoming the world’s largest bank by market value.
As of September 8, 2025, Agricultural Bank’s annual increase has approached 35%.
Based on the above trajectory of market value changes, the big four banks have undergone two phases of rising market value in the past decade:
From 2015 to 2017, the monetization of shantytown renovation created an enormous demand for personal housing loans; supply-side reforms improved profitability for upstream state-owned enterprises such as steel and coal by cutting overcapacity, effectively resolving banks’ concerns over corporate asset quality.
At that time, banks enjoyed abundant profit margins thanks to the money multiplier effect;
ICBC, with its vast scale, broad client base, and integrated operations, continued the narrative of “the strong remain strong,” further consolidating its lead as the “bank of the universe.”
In the valuation recovery period from 2023 to 2025, the roles flipped.
Agricultural Bank, catching up later, continually rose in market value, leaping from third among the big four to first;
As of the close on September 8, Agricultural Bank’s A-share PB ratio reached 0.95, still lower than the peak of 1.35 over the decade, but already showing obvious recovery.
Breaking down the fundamentals and key metrics, the logic behind Agricultural Bank’s valuation rebound is not hard to understand:
After 2022, all big four banks showed obvious sluggishness in profit growth; although Agricultural Bank’s profit growth slowed, the increase always ranked first among its peers, becoming the only major bank with positive profit growth in the first half of 2025.
From the perspective of balancing scale, price, and risk, Agricultural Bank’s indicators in recent years have also ranked among the best among its peers:
From 2022 to the first half of 2025, Agricultural Bank’s asset scale grew by nearly 40%, ranking first among the big four; net interest margin fell by 0.58 percentage points, in the mid-range among peers; non-performing loan ratio dropped by 0.09 percentage points, the best improvement among the big four banks.
Thus, solid performance supports the recovery in Agricultural Bank’s valuation.
Cycles Make or Break
Why did Agricultural Bank stand out amidst the current economic environment?
This is partly inseparable from Agricultural Bank’s strategy, management, and operations, but often overlooked is the relationship between banks’ core business strengths and the economic cycle.
For example, from 2015 to 2017, China’s commercial housing sales area surged 31.8%, sales revenue increased by 53.1%, and profits of large-scale steel and coal enterprises jumped amid capacity reductions;
All these provided further performance support for ICBC, which focuses on industry, features commerce, and is oriented toward cities as its main battleground.
Another example: under the interest rate cycle pressure after 2022, Bank of China, leveraging its foreign exchange and overseas businesses, hedged interest margin pressure at home by gaining returns from a global interest rate hike environment, achieving the smallest decline in net interest margin among state-owned major banks.
However, Agricultural Bank’s years of deep involvement in county-level finance precisely became its buffer in the downturn.
In 2024, county business accounted for 49.1% of Agricultural Bank’s revenue, and county loan growth far outstripped the bank-wide average; by year-end, its 23,000 county outlets made it the only financial institution with a presence in every county.
During times of falling housing prices, asset depreciation, and weak consumer willingness, the county market actually showed more pronounced resilience:
For example, many county residents care first about deposit safety, with limited financial product options and few deposit substitutes available, making them less sensitive to deposit rate cuts—enabling banks to acquire low-cost liabilities;
Also, county banks primarily serve scattered farmers and micro/small enterprises. Loans are small and risks are dispersed, while in downcycles clients are often more willing to repay, providing better asset quality guarantees;
And from a demographic perspective, in recent years, the “return home” wave driven by the crowding-out effect of first-tier cities, plus the spread of e-commerce and logistics, has further spurred county economies to rise.
Today, the market only sees Agricultural Bank’s current stellar performance and market value but overlooks the prelude and perseverance it planted and maintained three years ago in county-level support.
In February 2022, the year's "No.1 Central Document" was released, emphasizing rural revitalization and financial services. Afterwards, the central bank and regulators issued policy documents stressing greater investment in loans to key agricultural and rural areas.
That same month, Agricultural Bank explicitly set two goals: “becoming the leading rural revitalization bank” and “the backbone bank serving the real economy”, highlighting “agriculture-related business” as its unique advantage and growth driver, and indicating that county business was embracing new opportunities under policy, with accelerated expansion of grassroots “capillaries.”
Comparing Agricultural Bank and ICBC’s respective strengths in their main battlegrounds makes this difference even clearer.
From 2022 to 2024, both banks’ loan focuses were similar:
First, the economically developed and deepening potential Yangtze River Delta; second, the less covered but broader-potential western region.
However, both banks’ sources of liabilities and profits differed considerably.
Agricultural Bank targeted the Yangtze River Delta and western regions, and in 2024, both regions ranked among the top nationally in deposit share, revenue, and profit contribution;
Regarding branch changes, in 2022 and 2024, 65% and 56.5% of Agricultural Bank’s new or relocated outlets were in counties, urban-rural fringes, and townships—down slightly, but still much higher than any other major state bank.
ICBC’s main battleground, by contrast, is the Bohai Rim and Yangtze River Delta regions.
Although the proportion of loan deployment in the west is high, in 2024, nearly 30% of ICBC’s deposits came from the Bohai Rim; this region accounted for 20% of ICBC’s revenue and 24.4% of its profits, making it its core “heartland.”
In terms of branch layout, in 2022 and 2024, new/relocated ICBC outlets in counties and towns accounted for 11.7% and 19.73%, figures rising but still much lower than Agricultural Bank.
The division of battlefields reflects strategy and resource endowments, and determines the divergence of stories across different cycles.
Many Possibilities for the Future
From this perspective, the narrowing of ICBC’s lead in market value doesn’t mean it is underperforming in its core business areas.
In the first half of this year, ICBC performed well both in its main industrial responsibilities and in commerce, with loan balances for manufacturing, strategic emerging industries, and green loans exceeding 5 trillion, 4 trillion, and 6 trillion yuan respectively—the highest in the market.
But as China’s population migration and urbanization slow—possibly even shift back towards counties—ICBC’s business structure, tied to urbanization, corporate investment willingness, and consumer confidence, will come under growing pressure.
On the one hand, urban large enterprises and industrial/commercial sectors, in a downcycle, have less willingness to expand or reinvest; indicators such as manufacturing PMI weaken, directly impacting corporate loan demand;
Transformation pains in traditional strongholds like the Bohai Rim accentuate short-term performance pressures.
On the other hand, personal customers are increasingly conservative on consumption and home-buying. Either because of declining willingness or the wave of early repayments, banks face loan contraction and reallocation pressures, all of which may disturb ICBC’s fundamentals and valuation.
It’s important to distinguish that cyclical pains are not the same as a loss of long-term competitiveness;
The market’s focus on the change of market value leadership may also mask the effort and energy ICBC is accumulating at the bottom of the cycle.
It’s evident that ICBC still possesses solid fundamentals:
For example, its dominance in core regions like the Yangtze River Delta, Pearl River Delta, Bohai Rim—strong customer networks, channels, and brand advantages;
Manufacturing and strategic emerging industry loan balances remain the best among peers in the first half, while in the new tracks of manufacturing upgrades and tech finance—directions for urban economic development—it enjoys leading positions;
Leadership in trade finance, RMB settlement, and personal financial asset balance—its “banking+investment banking” and “domestic+overseas” capabilities further stand out.
Now, the 15th Five-Year Plan calls for new productive forces tailored to local conditions, especially focusing on Beijing-Tianjin-Hebei and Yangtze River Delta industry clusters; the national central city work conference calls for “quality and efficiency” in city development centered on stock improvements;
If the economy bottoms and cycles back to recovery, core economic areas and urban economies regain vitality, and ICBC—which is more closely linked to city prosperity—may realize greater performance and valuation bounce.
This makes ICBC’s 0.72x PB and high dividend look like a “call option” on the development of China’s urban economy.
As a 2025 report noted, Goldman Sachs analyzed how US banks like JPMorgan Chase and Citigroup responded countercyclically.
Goldman pointed out that major banks don’t make dramatic countercyclical shifts in an economic slowdown. Instead, they stick to their core, strictly managing costs;
For example, strengthening core lending and deposits, focusing on light-capital intermediary businesses, reserving capital for future credit losses, and boosting efficiency via digital transformation.
According to Goldman, major bank valuations have partly absorbed market pessimism; if the environment improves, earnings and valuations can rebound meaningfully.
International cases show that maintaining strength in “counter-cycles” is more important than aggressive growth;
Just as focusing on core and controlling costs during troughs drove Agricultural Bank’s new highs, similar strategies may contain the seeds for ICBC’s future rebound.
Cycles never stand still. The story of the market value “throne” is not a simple win-lose affair.
Only by mastering the cycles, using their endowments well, and respecting economic rhythms can banks bloom in different economic seasons in turn.
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