Asset size surpassing 11 trillion yuan, how does Industrial Bank achieve resilient growth under net interest margin pressure?

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Facing a complex and ever-changing external environment, Industrial Bank has anchored its value-bank goal, achieving balanced, coordinated development in both scale, efficiency, and quality—turning in an eye-catching 2025 annual performance report for the market.

As of the end of 2025, the Industrial Bank Group’s total assets reached RMB 11.09 trillion, up 5.58% from the end of the previous year, firmly maintaining the second position among national joint-stock commercial banks. While its scale continued to expand steadily, the bank’s asset quality remained stable, with a non-performing loan ratio of 1.08%, continuously better than the industry average.

In the past 2025, Industrial Bank recorded operating income of RMB 212.741 billion, up 0.24% year over year, and attributable net profit of RMB 77.469 billion, up 0.34% year over year. Its operating income and net profit both posted double-digit increases for two consecutive years, and it remained among the leading group among joint-stock banks. Combined with the interim dividend implemented for the first time last year, the bank’s full-year dividend payout ratio for 2025 further increased to 31%, which has marked 16 consecutive years of increasing the dividend proportion.

Behind its equal emphasis on profitability and long-term returns is the continued display of Industrial Bank’s operational resilience over the years. Facing industry challenges such as the narrowing of net interest margins, the bank has adhered to stabilizing net interest margins while advancing non-interest business in parallel. By optimizing its asset and liability structure through ongoing dynamic balance, it has charted a good-looking “bottoming-out and rebound” smile curve.

“Liability first” strategy delivers results

Alleviating pressure from net interest margin narrowing

The net interest margin is the lifeline of bank operation and management. However, in recent years, due to changes in the macroeconomic environment, the LPR declining, and the relatively rigid nature of deposit costs, the net interest margin has continued to narrow, becoming a common challenge faced by the banking industry. Against this backdrop, Industrial Bank supports net interest margin resilience by optimizing its business structure and continuously refining asset-liability management, thereby helping the net interest margin maintain its resilience.

From the liability side, Industrial Bank has adhered to the “liability first” strategy. Retail, corporate banking, and interbank lines work together to develop their strengths in a coordinated manner, systematically promoting the high-quality development of liabilities and effectively easing the pressure from the narrowing of net interest margins.

At an earnings briefing held recently, management of Industrial Bank said that in recent years, commercial banks’ asset yields have generally been in a downward channel. Industrial Bank has insisted that controlling liability costs is the top priority for stabilizing net interest margins, taking multiple measures to reduce liability costs, including strictly implementing the deposit interest rate self-discipline mechanism and actively replacing time deposits with higher interest rates.

What can be seen is that in 2025, Industrial Bank’s deposit scale and quality improved simultaneously. Total deposits at year-end reached RMB 5.93 trillion, an increase of RMB 397.3 billion year over year. Of this, retail deposits exceeded RMB 1.8 trillion, up 14.81% from the end of the previous year, rising to second place among joint-stock banks. At the same time, by deeply cultivating key scenarios, the balance of settlement deposits driven by payroll disbursement and merchant acquiring accounted for 39.48% of the bank’s total retail settlement deposits, and the share of low-cost deposits increased.

In terms of deposit costs, the bank’s deposit interest expense rate in 2025 was 1.65%, a sharp year-over-year reduction of 33 bps. Specifically, the deposit interest expense rates for corporate deposits, retail deposits, and interbank deposits were reduced by 34 bps, 31 bps, and 59 bps, respectively.

It is worth noting that in the process of reducing deposit costs, banks may also face risks such as customer outflows. In response, Industrial Bank has continued to improve its customer operation system, realizing the transformation of “flow” into “retained volume” and enhancing customer stickiness. By the end of 2025, the bank had 115 million retail customers, including double-income customers and private banking customers, which increased by 12.87% and 12.83%, respectively. Corporate banking customers reached 1.667 million, with potential-and-above customers and value customers increasing by 10.57% and 12.25%, respectively.

While reducing liability costs, Industrial Bank has also continued to optimize the structure of its asset allocation, tilting credit resources toward key areas such as the “Five Major Articles” of finance.

As of the end of 2025, Industrial Bank’s total loans reached RMB 5.95 trillion, an increase of RMB 229.1 billion from the beginning of the year. Among them, green, technology, and manufacturing loans increased by 19.05%, 18.47%, and 15.10%, respectively, from the beginning of the year, and the asset structure continued to improve.

It is worth noting that technology finance, which Industrial Bank has prioritized and developed as the top among its “four business cards” in recent years, has shown some development results. By the end of 2025, the bank’s technology finance loan balance reached RMB 1.12 trillion, ranking first among joint-stock banks, and its loan non-performing ratio was only 0.85%, lower than the average level of corporate finance loans.

Benefiting from the steady expansion on both the funding and asset sides and structural optimization, Industrial Bank’s net interest margin narrowed by only 11 bps year over year to 1.71%, with the magnitude of decline controlled at a relatively better level among peers. On this basis, in 2025 Industrial Bank achieved net interest income of RMB 148.752 billion, up 0.44% year over year. It turned from negative to positive compared with the first three quarters, and it has been growing for three consecutive years, becoming an important driver of operating income growth.

Strengthening group synergy to grow non-interest income

Wealth custody performance stands out

Under the background of continued pressure on net interest margins, expanding middle-income business revenue has become a key path for banks to achieve high-quality development and a shift to a light-capital model. Industrial Bank has keenly seized the opportunities brought by residents’ wealth growth and the development of capital markets, focusing on developing businesses such as investment banking, wealth management, and asset management.

Thanks to coordinated and linked development across “big investment banks,” “big asset management,” and “big wealth,” the bank achieved net fee and commission income of RMB 25.891 billion in 2025, up 7.45% year over year. The growth rate expanded compared with the first three quarters, reversing the declining trend since 2023. Among them, net fee income from wealth sales grew by 3.49% year over year, while custody-related fee income grew by 5.35% year over year.

It is worth noting that “wealth bank,” one of Industrial Bank’s business cards, is also the bank’s core business focus. In 2025, Industrial Bank connected customers’ wealth needs with a “asset management + wealth” approach. Retail wealth AUM (excluding the market value of third-party stocks) reached RMB 1.9 trillion, while corporate finance wealth AUM reached RMB 352.6 billion.

Management of Industrial Bank mentioned in the earnings briefing that in 2026 it will promote the steady development of the wealth management business from two dimensions: the product system and customer services.

On the product side, it keeps pace with the market rhythm. In a low-interest-rate, high-volatility environment, on the one hand it builds a solid base portfolio, improves its cash and fixed-income product system, upgrades the “deposit +” matrix to cover short-, medium-, and long-term capital allocation, and optimizes the “spare change +” functions to improve the efficiency of managing idle funds; on the other hand it opens up empowerment by setting up an all-market product shelf and building a pyramid-shaped optional-feature product system, enhancing yield flexibility through small amounts of embedded optionality, to meet customers’ diversified asset allocation needs.

On the service side, it leverages the advantages of Industrial Bank’s wealth investment advisory team, combining digital means to interpret market conditions in a timely manner, guide diversified allocation, and help customers stand firm and hold their ground amid volatile markets.

In addition to fee and commission income, the bank’s other non-interest income saw its decline narrow. This was mainly because during periods of high-volatility interest rate fluctuations in the market, it fully leveraged the advantages of its investment and trading agile squads—judging trends, optimizing portfolios, and further deepening quantitative empowerment to increase returns. At the same time, the share of this income in operating income continued to rise steadily. Over the past five years, the bank’s other non-interest income as a proportion of operating income increased from 11% to 18%, making an important contribution to stabilizing operating income.

In the current operating environment of “low interest rates, narrow interest margins, and high risk,” this 2025 performance report from Industrial Bank demonstrates its long-term strategic resolve and development resilience. In the first year of the “15th Five-Year Plan,” Industrial Bank will continue to shine its four business cards—technology finance, green finance, a wealth bank, and investment banking—while maintaining sound operations and building distinctive features, steadily moving toward the strategic goal of fully building a first-class value bank.

(This article does not constitute any investment advice. The information disclosure content shall be based on the company announcements. Investors act on their own initiative and bear their own risks.)

Edited by: Meng Jintao

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