Non-interest income becomes a decisive factor: joint-stock banks in 2025 "Competing for dominance, struggling at the bottom"

◎ Reporter Ma Min

For listed joint-stock banks, differentiation and transformation have been the key keywords in their development in recent years.

Over the past year, under a challenging operating environment, the “feel” of joint-stock banks has been broadly similar—market share declined, net interest margins came under pressure, and concerns over risk remained. However, under the same questions, their operating results have differed greatly.

Among the nine A-share listed joint-stock banks, only three—China Merchants Bank, Industrial Bank, and SPDB (Shanghai Pudong Development Bank)—achieved growth in both revenue and net profit. Meanwhile, Ping An Bank, Everbright Bank, Huaxia Bank, and Zheshang Bank saw declines in both revenue and net profit.

“Three Kings of Corporate Banking” competing and chasing one another

In terms of scale, China Merchants Bank, Industrial Bank, China CITIC Bank, and SPDB have remained at the top tier of joint-stock banks, with total assets all exceeding 10 trillion yuan. China Merchants Bank has firmly held the “front seat” thanks to its retail strength, while Industrial Bank, China CITIC Bank, and SPDB are in a “race” with one another among the “Three Kings of Corporate Banking.”

In terms of scale, Industrial Bank surpassed 10 trillion yuan in the fourth quarter of 2024. A year later, in the fourth quarter of 2025, China CITIC Bank and SPDB also surpassed 10 trillion yuan. At the end of the third quarter of 2025, the difference in total assets between SPDB and China CITIC Bank was only 5.9 billion yuan, but in the fourth quarter, the gap widened to 49.2 billion yuan.

In terms of revenue generation, China Merchants Bank continues to “lead the pack” with revenue of 100k yuan. In 2025, the operating income of China CITIC Bank and Industrial Bank was 100k yuan and 100k yuan, respectively—differing by only 337.53B yuan. Yet after deducting various expense outlays, Industrial Bank’s net profit attributable to shareholders was higher by 212.48B yuan. This shows that cost reduction and efficiency improvement are a must; they have become the profit source that banks have no choice but to “squeeze.”

In stark contrast to the competition among the top tier, the back-end joint-stock banks are still struggling in the mire, and each has its own headaches.

Due to relatively heavy historical burdens, Minsheng Bank has increased its effort in making provisions. While its revenue grew 4.82% year over year, its net profit attributable to shareholders still fell 5.37%.

In addition, Ping An Bank, Everbright Bank, Huaxia Bank, and Zheshang Bank all saw year-over-year declines in both revenue and net profit, and they have not yet returned to a benign growth track of achieving both scale and returns improvements.

Non-interest income becomes the deciding factor

In a low interest-rate environment, the core profitability indicator—net interest margin—has continued its downward trend. Banks’ interest income “mainstays” have been difficult to keep stable, and the logic of “making up for price with volume” is no longer sustainable. Non-interest income has become the deciding factor.

The broader trend of net interest margin declining has not changed. For example, by the end of 2025, the net interest yield of Everbright Bank and China CITIC Bank fell by 14 basis points year over year—larger declines mainly driven by falling asset yields.

However, some banks have shown signs that their net interest margins are stabilizing. By the end of 2025, SPDB’s net interest margin was flat compared with the beginning of 2024. Minsheng Bank’s net interest margin “rose against the trend” by 1 basis point, mainly due to cost control on the liabilities side.

On the non-interest income front, China CITIC Bank has achieved positive growth for 6 consecutive years. At a performance briefing, Chairman Fang Ying of China CITIC Bank explained that over the past five years, the share of the bank’s non-interest income increased by 9.3 percentage points.

Stepping up wealth management business is an effective way to make up for middle-income, and it also tests banks’ capacity for operating with “lighter capital.”

Given the continued weakness in retail credit demand, even China Merchants Bank still sticks to its retail “moat.” In 2025, its net fee and commission income grew 4.39% year over year, including wealth management fee and commission income up 21.39% year over year. Its net interest margin also remained at a relatively high level among peers—1.87%.

Although Ping An Bank has experienced “pain during transformation” in retail, the bank said it has seen “light at the end of the tunnel.” As the transformation progress reached 70%, the contribution of retail finance to net profit has bottomed out and begun to rebound.

However, if non-interest income relies only on investment returns, it is vulnerable to volatility in financial markets. Ping An Bank has been affected accordingly, leading to declines in non-interest net income from businesses such as bond investments.

How to get through the cycle

In terms of asset quality, joint-stock banks as a whole are relatively steady.

Over the past year, joint-stock banks generally increased their efforts in disposing of non-performing assets. However, by the end of 2025, the non-performing loan ratios of Industrial Bank, Everbright Bank, and Minsheng Bank were higher than at the end of 2024. In addition, the non-performing loan ratios of personal loans at multiple joint-stock banks have also risen, and risk pressure in consumer loans and mortgage loans cannot be ignored.

As a “reservoir” for regulating the loan loss coverage ratio—often a profit “water tank”—it is sometimes possible to beautify financial statements by showcasing “financial techniques.” It is worth noting that by the end of 2025, Huaxia Bank’s loan loss coverage ratio fell to 143.30%, down 18.59 percentage points from the end of 2024. Zheshang Bank’s coverage ratio was 155.37%, down 23.30 percentage points from 178.67% at the end of 2024. Both have hovered near the 150% “warning line.”

In recent years, the growth rate of joint-stock banks’ performance has slowed somewhat, which can be described as “surviving in a squeeze.” This is because, on one side, state-owned large banks have been “moving downward” to capture clients and “pinch the tips,” and on the other side, city commercial banks have surged forward by leveraging their local advantages. Under “pressure from both ends,” joint-stock banks’ market share has declined year by year.

Regarding this year’s operating outlook, many joint-stock banks have acknowledged that it is “hard to be optimistic” and that “challenges remain.”

However, based on publicly available information from recent earnings briefings, joint-stock banks are also adopting new ideas in terms of strategic execution: China Merchants Bank is focusing on “starting retail anew,” Ping An Bank has vowed to “return to growth,” and Industrial Bank is stepping forward as a “value bank” … Joint-stock banks are generally beginning to think about what it means to have “the capability to get through the cycle,” and what impact it will have on their operations going forward. Let’s wait and see.

(Editor: Qian Xiaorui)

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