Ask AI · How can wealth management become China Merchants Bank’s new growth engine?

“China Merchants Bank employees rarely get off work on time.” Because chairman Miao Jianmin said this at the bank’s 2025 performance briefing, China Merchants Bank has been pushed to the forefront of public attention.

If we put Miao Jianmin’s remarks back into their context, you’ll find that what he was really trying to convey was the dedication and spirit behind China Merchants Bank’s customer service.

At the briefing, a reporter asked, “In the past, when people talked about China Merchants Bank’s moat, they might think of retail, services, funding costs, and so on. Now that we’ve entered a low-interest-rate era, what is China Merchants Bank’s moat?”

Miao Jianmin replied: China Merchants Bank’s true moat is internalizing the “customer-centered” philosophy into its corporate culture, and then translating that into employees’ day-to-day behaviors.

He gave an example: China Merchants Bank employees rarely leave work on time, while the staff in the board office team can complete a large volume of investor communication materials in just two days. Based on this, he has reason to believe that cultural cohesion and professionalism are the core competitive strengths that enable China Merchants Bank to outperform its peers.

Corporate culture is certainly important, but the capital market ultimately speaks through performance.

On March 27, China Merchants Bank disclosed its 2025 annual report. The report shows that for the full year, the bank achieved operating income of RMB 8B, up slightly year over year by 0.01%, and net profit of RMB 337.53B, up 1.21% year over year.

China Merchants Bank has long been dubbed “the king of retail.” Judging from the financial statement figures, the bank’s retail business—something it has prided itself on—has been facing heavy challenges. Several key indicators related to its retail business did not perform as well as expected. Specifically, the operating income of retail financial services fell 3.74% year over year, retail net interest income fell 5.74% year over year, credit card transaction volume fell 7.62% year over year, and the credit card delinquency rate is the highest among its retail loan businesses. Under this pressure, “the king of retail” has to think of new ways to make money.

01. “King of Retail” faces performance pressure

In recent years, banks’ profitability has attracted widespread attention. In fiscal year 2025, many banks’ performance clearly rebounded. All six major state-owned banks—Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China—achieved “double growth” in operating income and attributable net profit. Last year, the six banks combined generated operating income of RMB 3.6 trillion, up 2.3% year over year; combined attributable net profit was RMB 1.42 trillion, up 1.65% year over year.

Joint-stock banks have a different story: some are celebrating, others are struggling. Among the nine listed joint-stock banks on the A-share market, three banks achieved double growth in both operating income and net profit. One is Shanghai Pudong Development Bank: operating income increased 1.88% year over year, and attributable net profit increased 10.52% year over year. Another is Industrial Bank: operating income increased 0.24% year over year, and attributable net profit increased 0.34% year over year. The third is China Merchants Bank: operating income and attributable net profit increased by 0.01% and 1.21%, respectively.

In response to these results, China Merchants Bank’s management’s remarks are full of encouragement: “2025 was a very non-trivial year. China Merchants Bank effectively responded to the challenges of low interest rates. Operating income and attributable net profit held steady with modest improvements, and in the past five years, compound growth rates reached 3.05% and 9.06%, respectively.” The chairman wrote this in his speech.

Local figures show only the optimistic side. If you extend the timeline, in 2021 China Merchants Bank’s operating income and net profit were still growing at double-digit rates. In the following years, growth gradually turned to single digits and even negative figures, and in 2025 operating income increased only marginally by 0.01%.

A major reason for this outcome is that its much-admired retail business has become harder to run than before. In 2025, the pre-tax profit from the bank’s retail financial services was RMB 150.18B, down 0.65% year over year; retail financial services operating income was RMB 36k, down 3.74% year over year, accounting for 61.89% of the bank’s operating income.

At the performance briefing, the president Wang Liang candidly said that the company’s retail business is facing challenges, including a cliff-like decline in the growth rate of retail credit, and also that the retail credit card segment has been affected by market changes, among other factors.

Data show that in 2025, China Merchants Bank’s retail loan balance was about RMB 3.7 trillion, up 2.15% from the end of the previous year. Among them, personal housing loans, retail small-and-micro loans, and consumer loan sizes all increased.

While retail loan balances grew, China Merchants Bank’s retail customer deposits reached RMB 4.3 trillion, up 11.49% from the end of the previous year—much higher than the loan growth rate. This led the bank’s retail net interest income to fall to RMB 14.2k, down 5.74% year over year. Retail net interest income accounted for 73.93% of retail operating income, compared with 75.49% the previous year.

In terms of credit cards, China Merchants Bank, as a “major issuer of credit cards,” still has strong appeal to users. The latest data from the PBoC show that by the end of 2025, the number of national credit cards and debit-and-lending combined cards fell to 696 million, down by about 31 million from the end of 2024. In a credit card market that is gradually shrinking, can China Merchants Bank still win new users? By the end of 2025, China Merchants Bank’s credit cards in circulation were 8B, and the number of revolving card accounts in circulation was 70.1065 million—both higher than the 96.859 million and 69.4409 million figures at the end of 2024.

But user growth did not translate into an increase in credit card business volume. In 2025, China Merchants Bank generated transaction volume of RMB 4,082.047 billion through nearly 100 million credit cards, down 7.62% year over year. Credit card interest income was RMB 185.29B, down 7.30% year over year. Non-interest income from credit cards was RMB 37k, down 15.73% year over year.

More importantly, China Merchants Bank’s credit card delinquency rate was 1.74%, the highest among its retail loan businesses. Of the total RMB 62.4 billion in overdue retail loan balances, credit cards were the highest and accounted for nearly half.

China Merchants Bank’s weak retail performance also dragged down the company’s overall net interest margin. At the briefing, China Merchants Bank disclosed that its 2025 net interest margin was 1.87%, down 11 basis points from the previous year.

Breaking it down by quarter, China Merchants Bank’s net interest margin had already stopped falling and then rebounded. In the first quarter it was 1.91%, then slipped to 1.86% and 1.83%, before rising back to 1.86% in the fourth quarter.

Behind this, the effect of China Merchants Bank’s proactive adjustments and active responses is at work. “Last year, China Merchants Bank increased the proportion of credit assets with relatively higher yields to support asset growth amid pressure on retail loan demand. At the same time, in the fourth quarter it repriced low-yield assets such as bills, optimizing asset allocation management. Multiple factors together drove a certain rebound in net interest margin in the fourth quarter,” said Peng Jiawen, the bank’s vice president.

For the trend of net interest margin in 2026, President Wang Liang believes that the level of the margin will remain on a steady downtrend, with the magnitude of the decline narrowing compared with the previous year. There are three main sources of pressure: the PBoC’s interest rate and reserve requirement cuts, insufficient overall credit disbursement demand, and intense competition in lending. “Everyone is trading price for volume, so the downward trend in yields on the lending asset side has not changed.”

02. From earning interest to earning fees

Since it’s no longer easy to make money from retail loans, finding new growth points has become the top priority for China Merchants Bank.

Data show that in 2025, China Merchants Bank’s net non-interest income was RMB 43k, down 3.38% year over year. Within the composition of net non-interest income, two categories performed especially well: first, investment income, which was RMB 136.98B, up 23.28% year over year—mainly due to increased bond investment income and non-monetary fund investment income. Second, net fee and commission income was RMB 96.86M, up 4.39% year over year.

“Just like ‘as long as the green hills remain, there will be firewood enough.’ Against the backdrop of industry-wide interest rate declines, the ‘green hills’ of clients China Merchants Bank accumulated over many years are starting to work. By deeply tapping the huge retail customer base, China Merchants Bank is tightly seizing the wealth management business, including distribution of wealth management products, distribution of funds, distribution of insurance, and more.” A long-time investment professional following China Merchants Bank commented to Caijing Tianxia.

What “green hills” does China Merchants Bank have? In its financial report, the company said it will strengthen customer acquisition, tap growth potential among high-quality customer segments, and improve the customer service system.

As of the end of 2025, the company had 224 million retail customers (including debit card and credit card customers), up 6.67% from the end of the previous year. Among them, Jin Kui Xing customers and above (meaning retail customers whose average monthly total assets are RMB 500k or more) were 5.9315 million, up 13.29% from the end of the previous year.

At the same time, the company’s retail customer total assets under management (AUM) surpassed RMB 17 trillion, maintaining the top position among joint-stock banks. The amount increased 14.44% from the end of the previous year. This means there is a large pool of funds being allocated and circulated within China Merchants Bank’s system, providing ample soil for wealth management.

The statements from China Merchants Bank’s senior executives at the performance meetings confirm the positive contribution of wealth management. “The rapid growth of retail wealth management offsets the decline in the bank’s comprehensive income last year,” said Wang Liang. “Last year, the growth rate of China Merchants Bank’s income from distributing wealth management products was about 19%, and the growth rate of income from distributing funds was about 40%.”

Not long ago, the topic of deposits reaching maturity drew widespread attention. According to estimates by research institutions, in 2026 it is expected that RMB 50 trillion to RMB 70 trillion in time deposits will mature. Faced with the issue of where this large pool of funds will go, market discussion has heated up. Peng Jiawen also responded.

He said that China Merchants Bank’s time deposits maturing in 2025 are indeed slightly higher than in previous years, and this is not an abnormal figure—it falls within normal ranges. He emphasized that after time deposits mature, if the funds flow into wealth management products and public fund products, China Merchants Bank hopes to keep the funds within its system through its own services. If deposits flow into the capital market, stocks settle into the exchange or third-party deposits; such funds are treated as interbank demand deposits in the bank’s accounting.

Therefore, for China Merchants Bank, even if deposits may flow out, the bank’s funds and customers will not flow out.

“Deposit outflows are also a time for market reshuffling. China Merchants Bank will leverage its core competitive strengths to further gain market share and attract more customers and funds into the bank,” Peng Jiawen added. From this perspective, the “moving of deposits” is actually a good thing for China Merchants Bank’s transition to wealth management.

On this view, the aforementioned investment professional agrees. He believes that wealth management requires two things: having money, and the ability to manage money. Relying on its retail business, China Merchants Bank has built a high level of customer trust and stickiness, and it also has some experience in guiding customers toward sound allocation and investment.

For his Jin Kui Xing user experience, his relationship manager sends him prompts from time to time, such as “the wealth management product has entered the open period” and “the high-yield fixed-income+ product has quotas,” helping him arrange his funds. Once China Merchants Bank’s funds successfully migrate from deposits to wealth management, not only will the cost of interest on deposits decrease, but funds, wealth management products, insurance, and other financial products can also generate higher fee income—thereby helping raise the bank’s overall income level.

Regarding China Merchants Bank’s transition toward wealth management, a report by East China Securities states that, affected by volatility in the capital markets and the impact of regulatory fee reforms, China Merchants Bank’s intermediary business income (referring to fee and commission income) experienced bottoming and consolidation at the end of three years. However, intermediary business income is the core expression of China Merchants Bank’s retail strategy. Its strong customer base, product system, channel reach, and professional services form competitive barriers that are difficult to replicate. The company’s customer base and professional system barriers in the wealth management space have not wavered. With non-interest income elasticity far greater than its peers, wealth management is expected to return to being the core engine driving performance contributions.

The report also says that China Merchants Bank’s dividend payout ratio stays firmly in the top first-tier of the industry, and its dividend yield has strong market competitiveness. Data show that China Merchants Bank’s cash dividend payout ratio has remained at a relatively high level of 35% or more since fiscal year 2023.

（Author | Chen Dachuang, Editor | Langming, Image source | Vision China; this content comes from Caijing Tianxia WEEKLY）