Multiple banks' annual reports release positive signals; net interest margins are expected to stabilize this year.

  Touxiang Creative/Photo Submission                                             

Securities Times reporter Zhang Yanfen

Up to now, more than 20 A-share listed banks have disclosed their 2025 annual reports, including 6 state-owned big banks and 9 joint-stock banks. The data show that although net interest margins are still narrowing, the above-mentioned banks are gradually getting out of the predicament of negative revenue growth.

Looking back over the past 3 years, in the face of the low net interest margin environment, banks’ non-interest income has played an important supporting role, effectively offsetting the revenue shortfall caused by the decline in net interest income.

A positive change is that, as the pace of net interest margin narrowing slows down, net interest income—which is the core component of bank revenue—saw improvement in 2025. Multiple listed banks turned this indicator from negative to positive, which helped reverse the overall revenue situation’s continuous negative growth over the prior two years. In addition, even if some banks’ revenue and net interest income are still growing negatively, the rate of decline has already narrowed significantly.

Net interest income turning positive and expanding

As of now, among the 22 listed banks that have disclosed annual reports, a total of 12 banks have achieved year-on-year positive growth in net interest income.

Among them, 9 banks—including China Merchants Bank, SPD Bank, China Minsheng Bank, Huaxia Bank, Chongqing Rural Commercial Bank, Chongqing Bank, Zhengzhou Bank, Wuxi Bank, and Relying on Feng Bank—achieved their first year-on-year turnaround to positive after years of sustained negative growth in net interest income in recent years.

Many banks had net interest income negative growth in the previous two years, yet they still achieved positive revenue growth supported by non-interest income such as investment returns. Among the above banks, the five—China Merchants Bank, SPD Bank, China Minsheng Bank, Chongqing Bank, and Zhengzhou Bank—escaped the prior negative revenue growth trend, returning to positive revenue growth in 2025, driven by the positive growth in net interest income.

For example, China Merchants Bank, against the backdrop of two consecutive years of year-on-year declines in net interest income, saw operating income fall by 1.64% and 0.48% in 2023 and 2024, respectively. In 2025, the bank’s net interest income increased by 2.04% year on year, ultimately pushing full-year operating income to a slight positive growth of 0.01%.

However, it needs to be acknowledged that most of the above banks’ total net interest income in 2025 still has not exceeded that of 2022.

Overall, among the 22 banks mentioned above, 17 have achieved positive revenue growth, including 6 state-owned big banks and 4 joint-stock banks.

Judging by the performance of state-owned big banks, except for Bank of Communications, the other five state-owned big banks saw net interest income turn in negative growth in 2025, and their share of revenue also declined year on year. Positive revenue growth for big banks relied mainly on bond investment returns and income from intermediary business.

Big banks: average yield on corporate loans breaks “3”

In 2025, affected by the LPR cut and market interest rates remaining at low levels, commercial banks’ yield on earning assets continued to decline.

The annual reports show that in 2025, the average yield on corporate loans at Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China all collectively fell into the “2” range. Although personal loans still remained in the “3” range, overall asset-side yields continued to edge downward. By contrast, the loan yields of joint-stock banks and small and medium-sized banks still remained above the “3” range.

Taking Agricultural Bank of China as an example, the bank achieved net interest income of 5695.94 billion yuan in 2025, accounting for 78.5% of full-year operating income, but that was down by 110.98 billion yuan from 2024. Although growth in the bank’s scale helped increase net interest income by 440.49 billion yuan, changes in interest rates led to a decrease in net interest income of 551.47 billion yuan. From the bank’s credit assets, the average yield on corporate loans fell from 3.34% in 2024 to 2.88% in 2025, down by 46 basis points, resulting in a 7.9% year-on-year decline in the bank’s interest income from loans and advances paid in the previous year.

The key to supporting some banks to achieve growth in net interest income lies in synchronized cost control on the liability side.

For example, in SPD Bank’s case, both the loan interest rate income and investment interest income within its interest income structure declined year on year, but net interest income still achieved positive growth because the bank reduced costs on the liability side.

According to Wind data, in 2025 the average deposit cost ratio of the above 22 banks fell significantly by 34 basis points year on year, a decline much larger than the 15 basis points in 2024 and the 3.5 basis points in 2023.

Among them, multiple banks—including Ping An Bank, Bank of Communications, China Minsheng Bank, CMB Bank, Everbright Bank, Qingdao Bank, and Zhengzhou Bank—saw their 2025 average deposit cost ratio break below “2,” with declines generally in the 33–42 basis points range.

In addition, the average deposit cost ratios in 2025 for Postal Savings Bank of China, China Merchants Bank, China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, and Chongqing Rural Commercial Bank have been compressed to below 1.5%. Among them, Postal Savings Bank of China has the lowest average deposit cost ratio, at 1.15%.

Many big banks are optimistic about this year’s outlook

Currently, while banks’ net interest margins are narrowing, the rate of decline has noticeably slowed. Management teams at many listed banks have released positive signals, and they expect net interest margins to stabilize in 2026.

In 2025, China Construction Bank’s net interest margin was 1.34%, with the year-on-year decline narrowing by 2 basis points, and the quarterly decline also showed a marginal trend toward narrowing.

Regarding these changes, on the bank’s earnings briefing, China Construction Bank’s Chief Financial Officer Sheng Liurong said that the narrowing of the marginal decline can be attributed to three factors: first, repricing of existing loans has been gradually completed, easing pressure from the decline in loan yields; second, the scheduled deposits with relatively higher interest rates have concentrated at maturity, while interest costs on general deposits have fallen significantly, to a certain extent offsetting and mitigating the impact of the decline in loan yields on net interest margins; third, effective proactive asset-liability management was implemented—on the asset side, the bank further increased the proportion of relatively higher-yield financial investments in interest-earning assets; on the liability side, it increased efforts to expand general demand deposits and low-cost financial interbank demand deposits, while compressing high-cost deposits.

There is no doubt that deposit cost management remains the core lever for stabilizing interest margins.

With an advantage in low-cost deposits, Postal Savings Bank has raised its own-funded deposits to a strategic level. In an earnings briefing in 2025, Postal Savings Bank of China President Lu Wei introduced that last year the bank’s deposits grew by 8.2%, and self-operated deposits reached a new high in recent years; in new deposits, the share exceeded 40%, driving a 17 basis point decline in the cost of incremental funds.

Agricultural Bank of China saw net interest income increase by 2% year on year in 2024, but it declined again by 1.91% year on year in 2025. However, Agricultural Bank of China President Wang Zhiheng said he is optimistic about the bank’s operating outlook for 2026, noting that the trend of net interest margins stabilizing this year is clear.

Wang Zhiheng disclosed that judging from the bank’s situation in the first two months of this year, the year-on-year growth rate of its net interest income turned positive, and it is expected to reach a turning point in the first quarter, further confirming the positive changes in interest margins. Against this backdrop, the trend of operating revenue continuing to improve is evident.

For the outlook for net interest margins in 2026, Liu Chenggang, Vice President of Bank of China, is fairly confident. Looking ahead to 2026, Liu Chenggang expects that Bank of China’s year-on-year decline in net interest margins will narrow significantly, and net interest income is expected to achieve positive growth. In the face of a low-interest-rate environment, Liu Chenggang said the bank is confident it can seize market opportunities arising from the implementation of a package of incremental policy measures, fully leverage its global and comprehensive advantages and distinctive features, solidly balance “volume, pricing, risk, and efficiency,” and further enhance operating resilience and sustainable development capacity.

(Editor: Dong Pingping)

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