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 big banks and 9 joint-stock banks. The data show that although net interest margins continue to narrow, the above-mentioned banks are gradually getting out of the dilemma of negative revenue growth.

Looking back over the past three years, in 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.

One positive change is that as the pace of net interest margin narrowing slows down, net interest income—an essential component of bank revenue—saw improvement in 2025. Multiple listed banks saw this indicator turn from negative to positive, helping reverse the two-year-long trend of continuous negative revenue growth. 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 turns positive and expands

As of now, among 22 listed banks that have already released annual reports, 12 have achieved year-over-year positive growth in net interest income.

Among them, nine banks—including China Merchants Bank, Shanghai Pudong Development Bank, Minsheng Bank, Huaxia Bank, Chongqing Rural Commercial Bank, Chongqing Bank, Zhengzhou Bank, Wuxi Bank, and RuiFeng Bank—achieved a year-over-year turnaround to positive for the first time after several years of continuous negative growth in net interest income.

Many banks previously had negative net interest income growth in the prior two years, but still achieved positive revenue growth supported by non-interest income such as investment income. Among the above banks, the five banks—China Merchants Bank, Shanghai Pudong Development Bank, Minsheng Bank, Chongqing Bank, and Zhengzhou Bank—improved revenue growth by getting a boost from positive growth in net interest income, and in 2025 they returned to positive revenue growth.

For example, against the backdrop of China Merchants Bank’s net interest income declining year over year for two consecutive years, its operating income in 2023 and 2024 fell by 1.64% and 0.48% year over year, respectively; while in 2025, its net interest income grew by 2.04% year over year, ultimately driving a slight positive full-year growth in operating income of 0.01%.

However, it should 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 above, 17 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 all saw negative growth in net interest income in 2025, and the share of revenue also declined year over year. Positive revenue growth mainly relied on bond investment income and income from intermediary business.

Big banks: average yields on corporate loans break “3”

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

According to annual report disclosures, 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 loan yields were still in the “3” range, the overall asset-side yield continued to slide downward. By contrast, loan yields at joint-stock banks and smaller-to-mid-sized banks remained above the “3” range.

Taking Agricultural Bank of China as an example, it achieved net interest income of 569.94 billion yuan in 2025, accounting for 78.5% of full-year operating income, but this was down 11.1B yuan from 2024. Although the bank’s scale growth helped increase net interest income by 44.05B yuan, interest rate changes led to a decrease in net interest income of 55.15B yuan. In terms of the bank’s credit assets, the average yield on corporate loans fell from 3.34% in 2024 to 2.88% in 2025, a drop of 46 basis points, which caused its last year’s interest income from loans and advances to decline by 7.9% year over year.

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

For example, in the case of Shanghai Pudong Development Bank, both loan interest rate income and investment interest income in its interest income structure declined year over year, but its net interest income achieved positive growth because the bank reduced costs on the liability side.

According to Wind data, the average deposit cost ratio of the 22 banks’ in 2025 fell sharply by 34 basis points year over year, with the decline far 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, Minsheng Bank, Zheshang Bank, Everbright Bank, Bank of Qingdao, Zhengzhou Bank, and others—saw their average deposit cost ratios in 2025 fall below “2,” with decline ranges mostly in the 33–42 basis point interval.

In addition, the average deposit cost ratios in 2025 for Postal Savings Bank, 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 had the lowest average deposit cost ratio, at 1.15%.

Many big banks are optimistic about this year’s outlook

Currently, although the banking industry’s net interest margin is narrowing, the pace of decline has clearly slowed. Many listed banks’ management have issued positive signals, and net interest margin is expected to stabilize in 2026.

China Construction Bank’s net interest margin in 2025 was 1.34%, with a year-over-year narrowing of the decline by 2 basis points, and its quarterly decline also showed a trend of marginal improvement.

Regarding the above changes, at the bank’s performance briefing, Liu Yongrong, Chief Financial Officer of China Construction Bank, said the tightening in the marginal decline can be attributed to three factors: first, repricing of existing loans has gradually been completed, easing pressure on the decline in loan yields; second, time deposits with relatively higher paying rates concentrated and came due, while interest rates on demand deposits dropped significantly, which to a certain extent offset and slowed the impact of the decline in loan yields on net interest margin; third, the bank conducted effective, proactive asset-liability management—further increasing the proportion of financial investments with relatively higher returns in interest-earning assets, expanding its efforts on demand deposits and low-cost financial interbank demand deposits on the liability side, while simultaneously reducing high-cost deposits.

Undoubtedly, controlling deposit costs remains the core lever for stabilizing net interest margin.

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

Agricultural Bank of China achieved net interest income growth of 2% year over year in 2024, but in 2025 it again declined by 1.91% year over year. However, Agricultural Bank of China President Wang Zhiheng said he is optimistic about the bank’s business outlook for 2026 and pointed out that the net interest margin stabilization trend is clear this year.

Wang Zhiheng disclosed that based on conditions over the first two months of this year, the growth rate of the bank’s net interest income turned positive year over year. This suggests that the bank may see a turning point in the first quarter, further confirming the trend of positive changes in net interest margin. Against this backdrop, the trend of operating income continuing to improve is evident.

As for the trajectory of net interest margin in 2026, Liu Chenggang, Deputy President of Bank of China, is relatively confident. Looking ahead to 2026, Liu Chenggang expects the year-over-year decline in Bank of China’s net interest margin to narrow significantly, and that 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 capturing market opportunities arising from the implementation of a package of incremental policy measures, fully leveraging its globalized advantages and integrated strengths, and doing a solid job of achieving comprehensive balance across “volume, price, risk, and efficiency,” further strengthening business resilience and sustainable development capability.

(Editor: Qian Xiaorui)

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