Multiple banks' annual reports send positive signals; net interest margin is expected to stabilize this year.

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Securities Times reporter Zhang Yanfeng

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

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

One positive change is that as the pace of net interest margin narrowing slows down, net interest income—one of the core components of bank revenue—saw an improvement in 2025. Many listed banks turned this indicator from negative to positive, helping reverse the trend of continuous negative revenue growth seen in 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, 12 have achieved year-on-year positive growth in net interest income.

Among them, nine banks including China Merchants Bank, Pudong Development Bank, Minsheng Bank, Huaxia Bank, Chongqing Rural Commercial Bank, Chongqing Bank, Zhengzhou Bank, Wuxi Bank, and RuiFeng Bank first turned positive year-on-year after years of continuous negative net interest income growth.

Many banks previously had negative net interest income growth in the past two years, but still achieved positive revenue growth supported by non-interest income such as investment gains. Among the banks mentioned above, the five—China Merchants Bank, Pudong Development Bank, Minsheng Bank, Chongqing Bank, and Zhengzhou Bank—benefited from the positive growth in net interest income, enabling their revenue to break away from the prior negative growth trend and return to positive revenue growth in 2025.

For example, for China Merchants Bank, in the context of two consecutive years of year-on-year declines in net interest income, its operating income fell by 1.64% in 2023 and by 0.48% in 2024, respectively. In 2025, net interest income of the bank grew by 2.04% year-on-year, ultimately driving the full-year operating income to achieve a slight positive growth of 0.01%.

However, it needs to be acknowledged that for most of the above banks, the total amount of net interest income in 2025 still did not exceed that of 2022.

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

In terms of performance of state-owned large banks, except for Bank of Communications, the other five state-owned large banks all saw negative net interest income growth in 2025, and their share in revenue also declined year-on-year. Their positive revenue growth mainly relied on bond investment income and income from intermediary business.

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

In 2025, affected by the reduction in the LPR and interest rates running at low levels in the market, commercial banks’ returns on interest-earning assets continued to decline.

According to annual report disclosures, in 2025 the average yield on corporate loans for Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China fell collectively to the “2” range. Although personal loans still remained in the “3” range, the overall return on the asset side continued to slide. By contrast, the loan yields of joint-stock banks and small- and medium-sized banks remained at levels above the “3” range.

Taking Agricultural Bank of China as an example, the bank achieved net interest income of 569.594 billion yuan in 2025, accounting for 78.5% of full-year operating income, but that was down by 11.0984 billion yuan compared with 2024. Although the bank’s scale growth helped increase net interest income by 44.049 billion yuan, changes in interest rates led to a reduction of net interest income by 55.147 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, which resulted in last year’s interest income from loans and advances declining by 7.9% year-on-year.

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

Taking Pudong Development Bank as an example, in the bank’s interest income structure, both loan interest income and investment interest income declined year-on-year, but net interest income achieved positive growth. This is because the bank reduced costs on the liability side.

According to Wind data statistics, among the above 22 banks, the average cost rate of deposits in 2025 dropped significantly by 34 basis points year-on-year, with the decline notably larger than the 15 basis point drop in 2024 and the 3.5 basis point drop in 2023.

Among them, multiple banks including Ping An Bank, Bank of Communications, Minsheng Bank, Zhejiang Commercial Bank, Everbright Bank, Bank of Qingdao, and Zhengzhou Bank saw their 2025 average cost rate of deposits break the “2” threshold, with the decline generally falling in the 33–42 basis point range.

In addition, 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 had already brought down their 2025 average cost rate of deposits to below 1.5%. Among them, Postal Savings Bank of China had the lowest average cost rate of deposits, at 1.15%.

Many large banks are optimistic about this year’s outlook

Currently, although banks’ net interest margins are still narrowing, the rate of decline has clearly slowed. Many listed banks’ management have issued positive signals, and it is expected that net interest margins may stabilize in 2026.

Bank of Construction: the net interest margin in 2025 was 1.34%, with a year-on-year narrowing of 2 basis points. The quarterly decline also showed a marginal trend toward narrowing.

Regarding the above changes, Sheng Liu Rong, chief financial officer of China Construction Bank, said at the bank’s performance briefing that the narrowing of the marginal decline can be attributed to three factors: first, the repricing of existing loans has gradually been completed, easing downward pressure on loan yields; second, time deposits with relatively higher cost of interest concentrated to maturity, while the cost of interest on demand deposits declined sharply, 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 carried out—on the asset side, the share of financial investments with relatively higher yields in interest-earning assets was further increased, while on the liability side the bank expanded demand deposits and low-cost financial interbank demand deposits, and at the same time reduced high-cost deposits.

No doubt, deposit cost control remains the core lever for stabilizing interest margins.

Postal Savings Bank of China, with advantages in low-cost deposits, has elevated its self-operated deposits to a strategic level. At the bank’s 2025 performance briefing, Li Wei Lu, president of Postal Savings Bank of China, introduced that last year the bank’s deposit growth was 8.2%, with self-operated deposits hitting a new high in recent years. In newly added deposits, their share exceeded 40%, driving a decline in the cost of incremental funds by 17 basis points.

Agricultural Bank of China saw net interest income grow by 2% year-on-year in 2024, yet in 2025 it declined again by 1.91% year-on-year. However, Agricultural Bank of China’s president Wang Zhiheng expressed optimism about the operating outlook for 2026, pointing out that the trend of interest margin stabilizing is clear this year.

Wang Zhiheng revealed that based on the bank’s situation in the first two months this year, the year-on-year growth rate of its net interest income turned positive, and it is expected to see a turning point in the first quarter, further confirming a positive shift in the trend of interest margins. Against this backdrop, the continued favorable trend in operating revenue is evident.

Regarding 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 the year-on-year decline in Bank of China’s net interest margin to narrow significantly, with net interest income expected to achieve positive growth. In a low interest rate environment, Liu Chenggang said the bank is confident in seizing market opportunities brought about by the implementation of a package of incremental policies, fully leveraging its globalized advantages and diversified characteristics, solidly achieving a comprehensive balance of “volume, price, risk, and efficiency,” and further strengthening operational resilience and sustainable development capability.

(Editors: Dong Pingping)

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