Bank of America: A-share 9M earnings growth slows to 5.6%; recovery is uneven and estimate cuts resume

Why have A-share earnings shifted from growth to contraction?

A-share net profit grew year over year by 5.6% in 9M26, below 16.8% in 1H26; revenue growth also fell from 7.2% to 5.4%. In 3Q26 alone, A-share revenue grew just 1.9% year over year, while net profit fell 13.8%, indicating that the slowdown deepened toward quarter-end.
The financial sector was the main drag on cumulative earnings: net profit growth shifted from 17.0% in 1H 26 to a decline of 1.5% in 9M 26. BofA believes this may have been mainly related to insurers’ losses on stock trading during the market downturn; financial-sector revenue growth also fell from 14.0% to 0.1%, affected by a high base and subdued capital-market activity.
Financial subsectors were not moving in sync. Revenue growth at 42 listed banks rose from 7.4% in 1H 26 to 7.8% in 9M 26, while net profit growth increased from 3.0% to 3.8%; however, joint-stock banks’ net profit contracted to 2.8%, with higher provisions prompted by rising retail nonperforming loans posing a strain.

Excluding CXMT, revenue growth at the ChiNext and STAR Market boards rose from 21.9% in 1H26 to 22.2% in 9M26, still leading the A-share market; but net profit growth fell from about 50% in the first half to 35.7%, and declined further to 18.0% in 3Q26 alone. Revenue remained resilient, but earnings momentum had weakened.
Semiconductors and equipment, technology hardware, nonferrous metals and chemicals remained sectors with relatively strong revenue and earnings growth in 9M26. Meanwhile, net profit growth in pharmaceuticals and biotechnology rose to 33.5% in 3Q26, above about 10% in 1H26; medical equipment and services rose to 13.7%, above about 2% in the first half.
Domestic-demand-related sectors continued to lag: food and beverages, steel, building materials and real estate were relatively weak, with real estate’s earnings growth mainly reflecting a narrowing of losses. Earnings growth slowed in Q3 across most technology, metals and energy sectors; the report cites a high base or rising costs as the backdrop, while electrical equipment turned to contraction.

Capital expenditure at nonfinancial companies grew 5.5% year over year in 9M 26, above 3.6% in 1H 26; capital expenditure growth at the ChiNext and STAR Market boards rose to 22.2% and 15.5%, respectively. BofA links this acceleration to supply-chain investment driven by the global AI investment cycle.
As investment expanded, the debt-to-asset ratio at the ChiNext and STAR Market boards rose from 47.2% in 2Q26 to 48.5% in 3Q26. Nonfinancial companies’ rolling 12-month gross and net margins flattened or edged down in 3Q26, while overall ROE remained at 6.0%, indicating that capacity expansion had not yet been accompanied by a broad-based rise in profitability.
There were still bright spots in the composition: in 9M26, gross margins at semiconductors and equipment and nonferrous metals rose by more than 6 percentage points and more than 4 percentage points, respectively; however, the pace of improvement in market-wide ROE slowed compared with 2Q26.

Among about 3000 A-share companies with consensus estimates, forecasts for 2026 earnings had been cut 1.5% as of 31 October compared with August, and were down 2.4% since the start of the year. Revisions remained clearly differentiated: forecasts for semiconductors and equipment were raised 9.9% compared with August, while those for real estate were cut 27.2%, consumer durables and apparel 20.4%, building materials 19.5%, and food and beverages 10.2%.
At the index level, as the technology-stock sell-off broadened into a general market decline, consensus forecasts for 2026 earnings for the CSI 300 and ChiNext were cut 3.2% and 6.5%, respectively, compared with October, as of 3 November; the STAR 50 was cut 1.8% over the same period and 4.0% since the start of the year. This echoes the sector-level divergence in performance: technology still saw upward revisions, but index-level cuts had spread.