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

Securities Times reporter Zhang Yanfen

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. The data show that although net interest margins (NIMs) continue to narrow, the above-mentioned banks are gradually getting out of the predicament of negative revenue growth.

Looking back at the past 3 years, in the face of the low-NIM environment, banks’ non-interest income has played an important supporting role, effectively offsetting the revenue gap caused by declines in net interest income.

One positive change is that, as the pace of NIM narrowing slows down, net interest income—an essential component of banks’ revenue—saw improvement in 2025. Multiple listed banks had this indicator turn from negative to positive, helping reverse the trend of sustained negative revenue growth from the prior two years. In addition, even if some banks’ revenue and net interest income are still in negative growth, the rate of decline has already narrowed significantly.

Net interest income turning positive expands

As of now, among 22 listed banks that have disclosed their annual reports, 12 banks 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, Bank of Chongqing, Bank of Zhengzhou, Wuxi Bank, and RuiFeng Bank—achieved a turnaround to positive year on year for the first time after several years of continuous negative growth in net interest income.

In recent years, many banks previously had negative growth in net interest income for two straight years, but still achieved positive revenue growth supported by non-interest income such as investment income. Among the above-mentioned banks, the 5 banks—China Merchants Bank, Pudong Development Bank, Minsheng Bank, Bank of Chongqing, and Bank of Zhengzhou—escaped the previous negative revenue growth trend due to the positive growth in net interest income, returning to positive revenue growth in 2025.

For example, China Merchants Bank, against the backdrop of consecutive years of year-on-year declines in net interest income, saw its operating income decrease by 1.64% in 2023 and by 0.48% in 2024. However, in 2025, the bank’s net interest income grew by 2.04% year on year, ultimately driving a slight full-year positive growth in operating income of 0.01%.

That said, it needs to be acknowledged that the total amount of net interest income of most of the above-mentioned banks in 2025 has still not exceeded that of 2022.

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

In terms of performance by state-owned large banks, except for Bank of Communications, the other 5 state-owned large banks all had negative growth in net interest income in 2025, and the share of revenue they account for also declined year on year. Positive revenue growth at large banks mainly relied on bond investment income and fee-based business income.

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

In 2025, affected by the LPR cut and market interest rates running at low levels, the yield on interest-earning assets of commercial banks 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 fell collectively into the “2” range. Although personal loan yields still remained in the “3” range, overall asset-side yields continued to slide further down. By contrast, loan yields at joint-stock banks and smaller and mid-sized banks still remained above the “3” range.

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

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

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

According to statistics from Wind data, among the 22 banks mentioned above, the average deposit cost rate in 2025 fell sharply by 34 basis points year on year, with a drop significantly higher than the 15 basis points in 2024 and the 3.5 basis points in 2023.

Among them, several banks—including Ping An Bank, Bank of Communications, Minsheng Bank, Zhejiang Commercial Bank, Everbright Bank, Bank of Qingdao, Bank of Zhengzhou, etc.—saw their average deposit cost rates in 2025 break “2”, with the decline mostly in the 33–42 basis point range.

In addition, the average deposit cost rates in 2025 at 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, the lowest average deposit cost rate belongs to Postal Savings Bank of China, at 1.15%.

Many large banks are optimistic about this year’s outlook

Although the banking industry’s NIM is still narrowing at present, the rate of decline has clearly slowed. Multiple listed banks’ management have released positive signals, and it is expected that NIMs may stabilize in 2026.

In 2025, Bank of Construction’s NIM was 1.34%, narrowing by 2 basis points year on year, and the quarter-on-quarter decline also showed a marginal narrowing trend.

Regarding the above changes, at the bank’s performance briefing, Sheng Liurong, Chief Financial Officer of Construction Bank, said the marginal narrowing of the decline can be attributed to three factors: first, the repricing of existing loans has gradually been completed, easing some pressure on the decline in loan yields; second, fixed deposits with relatively higher interest rates are concentrated as they mature, while the interest rate on general deposits has declined significantly, which to a certain extent offsets and mitigates the impact of the decline in loan yields on NIM; third, effective proactive asset-liability management has been carried out. The bank further increased the proportion of financial investments with relatively higher returns in interest-earning assets, expanded the expansion efforts for general demand deposits and low-cost financial interbank demand deposits on the liability side, and simultaneously reduced high-cost deposits.

No doubt, deposit cost management remains the core lever for stabilizing NIM.

Postal Savings Bank, which has an advantage in low-cost deposits, has elevated its self-operated deposits to a strategic level. At the 2025 performance briefing, Postal Savings Bank President Lu Wei introduced that last year the bank’s deposits grew by 8.2%, self-operated deposits reached a new high in recent years, and the share of new deposits exceeded 40%, bringing down the cost of incremental funds by 17 basis points.

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

Wang Zhiheng disclosed that based on the situation in the first two months of this year, the year-on-year growth rate of the bank’s net interest income turned positive, and there is hope of a turning point in the first quarter, further confirming the trend of positive changes in NIM. Against this backdrop, the trend of operating income continuing to improve is evident.

For the outlook of NIM in 2026, Liu Chenggang, Vice President of Bank of China, is relatively confident. Looking ahead to 2026, Liu Chenggang expects that the year-on-year decline in Bank of China’s NIM 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 in seizing market opportunities brought by the rollout and implementation of a package of incremental policies, giving full play to its global advantages and integrated strengths and distinctive features, and solidly carrying out a comprehensive balance of “quantity, price, risk, and efficiency,” to further enhance business resilience and sustainable development capacity.