The six major banks' net interest margin comparison: Postal Savings Bank of China remains first with 1.66%

This newspaper (chinatimes.net.cn) reporter Lu Mengxue Beijing reports

On March 30th, the financial reports of six major state-owned banks for 2025 were all released. As the “ballast stone” of the banking industry, these six large banks achieved a total operating income of 3.60 trillion yuan and a net profit of over 1.44 trillion yuan in 2025, under the background of benefiting the real economy.

As a core indicator of bank profitability, the net interest margin (NIM) of the six major banks showed a marginal convergence of decline and a steady rebound quarter-on-quarter in 2025. Although still on a downward trend, through a combination of credit structure optimization, refined management of liability costs, and expansion of non-interest income, the downward pressure on their interest margins has significantly eased.

Looking ahead to 2026, as fixed-term deposit maturities with high interest rates mature, the re-pricing of existing loans approaches completion, and the cost of interbank liabilities continues to decline, the six major banks generally predict that the year-on-year decline in industry net interest margin in 2026 will significantly narrow.

Margin decline narrows, signs of stabilization are evident

Financial reports show that in 2025, the operating income and net profit of the six major banks both achieved “double positive growth.” However, influenced by factors such as the reduction of Loan Prime Rate (LPR), re-pricing of existing loans, and intensified deposit competition, the net interest margin of the six banks still trended downward.

Specifically, Postal Savings Bank maintained a relative advantage with a NIM of 1.66%, ranking first among the six banks; China Construction Bank’s NIM was 1.34%. The other banks’ NIMs were generally below 1.3%, specifically: Agricultural Bank of China 1.28%, Industrial and Commercial Bank of China 1.28%, Bank of China 1.26%, and Bank of Communications 1.20%.

In terms of decline, all six banks saw their net interest margins decrease compared to 2024, with Bank of Communications narrowing by 7 basis points, the smallest decline. Notably, although still narrowing, compared to the year-on-year decline in 2024, the overall decline in net interest margin for the six major banks in 2025 has approached convergence. Among them, Bank of China and ICBC’s NIM declines were 5 basis points less than in 2024; Agricultural Bank and Construction Bank’s declines were 4 and 2 basis points less than in 2024, respectively.

In fact, since the second half of 2025, market expectations of the stabilization of the net interest margins of the six major banks have been evident. Based on year-end data, ICBC and Bank of Communications’ NIMs remained flat compared to the end of Q3 2025; China Construction Bank and Postal Savings Bank’s NIM declines at year-end were controlled within 0.01 to 0.02 percentage points from Q3 2025, with clearer signals of quarter-on-quarter stabilization.

Yuan Shuai, co-founder of New Wisdom New Quality Productivity Salon, analyzed to Huaxia Times that the narrowing of NIMs will compress banks’ interest income space. If a bank’s NIM declines significantly and cannot be offset by other businesses, its revenue will be affected.

Against the backdrop of a slowing decline in NIM, the net interest income of the six major banks in 2025 also improved. Among them, Bank of Communications’ net interest income continued to grow, with a year-on-year increase of 1.91%; ICBC, China Construction Bank, and Bank of China saw their NIM declines narrow by 3.12, 7.54, and 5.76 percentage points respectively compared to 2024.

Hedging pressure from narrowing interest margins

The marginal improvement in net interest margin is not accidental. From the financial reports and performance conference statements, strengthening dual control of assets and liabilities, stabilizing the core of net interest income, and increasing contributions from non-interest income are the core logic for the six major banks to hedge against margin pressure.

Construction Bank’s CFO Sheng Liurong stated at the earnings release that the main reasons for the narrowing of the bank’s NIM in 2025 are threefold: first, the gradual completion of re-pricing of existing loans, reducing downward pressure on loan yields; second, the maturity of high-cost fixed-term deposits, combined with the self-discipline mechanism of interbank deposit rates, led to a significant decline in interest expenses; third, proactive optimization of asset-liability structure, reducing high-interest deposits and expanding low-cost interbank deposits.

The reporter learned that on the asset side, Construction Bank increased the proportion of higher-yielding financial investments, which rose by 1.66 percentage points in interest-earning assets in 2025; on the liability side, the bank effectively managed through tiered customer pricing, reducing high-interest deposits and expanding low-cost financial interbank deposits. Sheng Liurong emphasized that effective control of liability costs has played a significant role in the marginal narrowing of interest margins.

In terms of fee and commission income, in 2025, the net income from fees and commissions of the six major banks maintained positive growth. Among them, Agricultural Bank of China’s fee and commission income increased by 16.57% year-on-year, Postal Savings Bank by 16.15%, making them the fastest-growing banks. The proportion of fee and commission income in total revenue increased for five of the six major banks compared to 2024.

Lín Lì, Vice President of Agricultural Bank of China, introduced that in 2025, the bank’s wealth management income reached 35.7 billion yuan, and wealth management fee income reached 25.1 billion yuan, becoming a new growth engine. It is reported that the significant increase in fee and commission income in 2025 was mainly due to the rise in income from wealth management and agency fund sales, with agency business growing by 87.8%.

Liang Shidong, Retail Business Director of Postal Savings Bank, stated that the bank’s strategy is to solidify the first growth curve while expanding the middle-office business and developing the second growth curve, with wealth management being an important pillar of the second curve. Last year, Postal Savings Bank’s wealth management business developed rapidly, with private banking clients increasing by 26%. Additionally, based on maintaining its insurance advantages, the bank’s non-insurance income increased by over 38%, accounting for more than half of the entire agency sales income, a 14 percentage point increase from the previous year.

“2025 has seen the six major banks deliver a generally stable asset quality and a clear division of profit pressures amid complex and volatile internal and external environments,” said Dong Xiemiao, Chief Economist at Zhaolian. Overall, large commercial banks’ profitability has declined somewhat under the influence of low interest rates, with net interest margin compression becoming a common challenge.

Approaching the interest margin turning point

A relevant person from the People’s Bank of China stated at a press conference that in 2026, a large volume of long-term deposits such as three-year and five-year deposits will mature and be re-priced. CICC’s research report pointed out that the estimated scale of household fixed-term deposits maturing in 2026 is about 75 trillion yuan. As deposit interest rates continue to decline, several state-owned banks also responded at their earnings releases regarding the batch maturity of fixed-term deposits.

Zhou Wanfu, Vice President of Bank of Communications, pointed out at the earnings conference that in recent years, the banking industry has generally faced the problem that deposit re-pricing is slower than loan re-pricing. However, with the lowering of deposit listing rates and the re-pricing of a large volume of fixed-term deposits upon maturity, deposit interest costs will significantly decrease. This year, the amount of fixed-term deposits maturing at Bank of Communications increased compared to last year, with a large proportion concentrated in the first quarter, which will strongly support the re-pricing effect on the net interest margin for the whole year.

Yang Jun, Vice President of Bank of China, also stated that starting from the second half of 2025, the scale of maturing fixed-term deposits at Bank of China increased. Since current deposit rates are lower than those three years ago, the re-pricing of these deposits will lead to a decline in deposit interest expenses, positively impacting the bank’s stable interest margin.

Looking ahead to the trend of net interest margin in 2026, the six major banks generally believe that the marginal stabilization trend is likely to continue.

Yao Mingde, Vice President of ICBC, predicted that the bank’s net interest margin in 2026 is expected to show an “L-shaped” trend. Although the downward trend in NIM has not changed in the short term, favorable factors promoting improvement are continuously accumulating, and the marginal stabilization is expected to persist.

He specifically mentioned that in the first two months of this year, ICBC’s new loans for corporate and personal housing loans have already shown signs of stabilization. The interest rates on newly issued loans decreased by only 2 basis points compared to last year, with a smaller decline of 18 basis points year-on-year, indicating a significant narrowing of the decline. Without further large adjustments to LPR and deposit listing rates, ICBC’s interest net income is expected to turn positive year-on-year this year, with the net interest margin decline further converging with 2025.

Wang Zhiheng, President of Agricultural Bank of China, also responded that the year-on-year growth rate of net interest income is expected to turn positive, with an inflection point likely in the first quarter. He revealed that in the first two months of 2026, the bank’s operations continued to maintain a steady and positive trend. The increase of 1.1 trillion yuan in real entity loans, with a year-on-year increase, and the stabilization of interest margins have laid a solid foundation for the bank’s profit growth.

Editor: Feng Yingzi Chief Editor: Zhang Zhiwei