Non-interest income "supports" net interest margin stabilizes Six major banks' 2025 performance demonstrates resilience

Wu Yang, China Securities Journal

Recently, the six state-owned commercial banks have successively turned in their 2025 performance answer sheets characterized by steady progress and dual improvement in quality and efficiency: operating income and net profit both grew across the board; non-interest income has become an important growth engine. Net interest margin has narrowed somewhat, with coordinated efforts on both lending and deposits sides to stabilize pricing and control costs. Asset quality has remained sound, and combined with a high proportion of cash dividends, they have laid a solid foundation for high-quality development while serving the real economy. At the earnings release conference, management of the six banks responded to market concerns such as the trend in net interest margin and dividend arrangements, sending out positive signals.

Non-interest income takes up the banner of growth

Overall, the six banks have continued to expand their asset scale, with a significant effect of consolidation among the top institutions. By the end of 2025, Industrial and Commercial Bank of China’s total assets exceeded 53 trillion yuan; China Construction Bank and Agricultural Bank each reached the 45 trillion yuan and 48 trillion yuan thresholds, respectively; Bank of China surpassed 38 trillion yuan; and Postal Savings Bank of China and Bank of Communications also reached 18.68 trillion yuan and 15.55 trillion yuan, respectively.

On the profitability front, all six banks achieved “double growth” in revenue and net profit attributable to shareholders, showing clear operating resilience. Industrial and Commercial Bank of China recorded operating income of 838.70 billion yuan and net profit attributable to shareholders of 368.62 billion yuan, ranking first in the industry. Agricultural Bank recorded net profit attributable to shareholders of 291.04 billion yuan, up 3.18% year over year, with the growth rate leading its peers. For China Construction Bank, Bank of China, Bank of Communications, and Postal Savings Bank of China, net profit attributable to shareholders increased by 0.99%, 2.18%, 2.18%, and 1.07% year over year, respectively; the combined net profit attributable to shareholders of the six banks exceeded 1.42 trillion yuan.

Breaking down the components of operating income shows that, in a low-interest-rate environment, net interest income is generally under pressure, and non-interest income has become the core pillar supporting performance growth.

In 2025, Industrial and Commercial Bank of China’s non-interest income was 530k yuan, up 10.2% year over year. Postal Savings Bank’s net fee and commission income increased 16.15% year over year, while its other non-interest net income grew 19.73%. Bank of China’s non-interest income accounted for 33.06%; standout contributions came from wealth management, settlement and clearing, and financial market transaction businesses. Bank of Communications’ non-interest net income grew 2.22% year over year.

Agricultural Bank achieved net fee and commission income of 450k yuan, up 16.6% year over year, including 87.8% growth in agency business. The bank explained that it was mainly due to deepening the transformation of its wealth management business, which led to increased income from wealth management products and fund distribution.

**　Net interest margin’s decline has narrowed somewhat**

Affected by the LPR cut and the market interest rate staying at a low level, in 2025 the net interest margins of the six banks narrowed across the board. Postal Savings Bank’s net interest margin ranked first among the six banks at 1.66%, showing a downward trend year over year. Industrial and Commercial Bank of China’s net interest margin was 1.28%, down 14 basis points year over year. Agricultural Bank’s was 1.28%, down 14 basis points year over year. Bank of China’s was 1.26%, down 14 basis points year over year. China Construction Bank’s was 1.34%, with the decline narrowing by 2 basis points year over year. Bank of Communications’ was 1.20%, down 7 basis points year over year.

It is worth noting that the amount of decline in interest spreads has shown a pattern of narrowing each quarter and stabilizing at the margin. Regarding the interest spread trend, management of each bank released positive signals at the earnings release conference.

Yao Mingde, vice president of Industrial and Commercial Bank of China, believes that in 2026 the interest spread is likely to follow an “L-shaped” trajectory. If further major adjustments to interest rates are not considered, the bank expects its net interest income this year to turn positive year over year. Management of China Construction Bank believes that by optimizing the structure of assets and liabilities, it is confident in maintaining leading advantages in net interest margin among comparable peers.

On the asset side, the six banks have continued to optimize their credit structure and step up support for the real economy. For example, by the end of 2025, Industrial and Commercial Bank of China’s manufacturing loan balance exceeded 5 trillion yuan. China Construction Bank’s technology loan balance exceeded 5 trillion yuan, up 18.91% from the end of the previous year. Bank of China provided technology loan support to 171.8 thousand enterprises, totaling 4.82 trillion yuan.

On the liabilities side, deposit cost management has achieved notable results. Taking Postal Savings Bank as an example, its net interest margin has been maintained at the industry’s relatively better level of 1.66%. Its president, Lu Wei, said: “Our deposit sources are relatively stable. The interest rate paid on deposits is very low among listed banks, and we have strong cost advantages.”

Regarding the issue that time deposits are concentrated on maturity, Yang Jun, vice president of Bank of China, stated that starting from the second half of 2025, the amount of time deposits coming due increased somewhat, but most of it was still kept in the form of deposits, and the relevant impact expected this year is limited. Tang Shuo, vice president of China Construction Bank, said that in recent years the development of savings deposits at the bank has been fast; the amount of time deposits reaching maturity has grown in parallel, and overall the roll-over and uptake of maturity funds has been good.

High-proportion dividends to reward shareholders

While stepping up credit deployment, the six banks have kept asset quality stable and sound.

By the end of 2025, the six banks’ non-performing loan ratios were all lower than at the end of the previous year. Industrial and Commercial Bank of China’s non-performing loan ratio was 1.31%. Agricultural Bank’s was 1.27%. Bank of China’s was 1.23%. China Construction Bank’s was 1.31%. Postal Savings Bank’s was 0.95%. In terms of allowance coverage ratio, Agricultural Bank ranked first among the six banks at 292.55%. China Construction Bank and Postal Savings Bank were 233.15% and 227.94%, respectively, indicating sufficient risk coverage capacity.

Risk in the retail segment remains a key focus. Li Jianjiang, vice president of China Construction Bank, said that the year-over-year narrowing in the rate of increase of non-performing loans for personal loans has eased. Judging from the current operating trend, risk prevention and control in the retail segment will remain a key focus. Xu Xueming, vice president of Postal Savings Bank, said that under extremely high pressure, its retail segment achieved positive growth, maintaining its position as the “keystone.”

In terms of shareholder returns, the six banks have continued the tradition of paying dividends with a high proportion. Industrial and Commercial Bank of China expects 2025 annual cash dividends of 110.6 billion yuan, with the dividend payout ratio staying above 30%. For the other banks, dividend payout ratios were also maintained at around 30% or higher.

Zhang Baojiang, president of Bank of Communications, disclosed that during the “14th Five-Year Plan” period, the bank cumulatively distributed 123.9 billion yuan in cash dividends to all shareholders, and the dividend payout ratio has remained above 30% for consecutive years.

(Editor: Qian Xiaorui)

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