The Path of the Wise China Merchants Bank

In recent years, global geopolitical conflicts and trade frictions have occurred frequently, with domestic economic development accelerating its transformation, the real estate market undergoing deep adjustments, interest rate marketization continuously deepening, and financing disintermediation ongoing… The banking industry’s development environment has undergone profound changes, industry challenges are severe, the pain of transformation persists, and internal differentiation has intensified. By 2025, over 400 banks nationwide will have exited the market due to mergers, acquisitions, or closures. The industry’s “winter” has driven banks to transform and seek change, striving to navigate the cycle.

When the tide recedes, the true picture emerges. In the 2025 annual report, China Merchants Bank once again demonstrated its resilience amid cyclical fluctuations, reflecting the confidence and determination of this bank approaching its half-century mark as it embarks on a new journey.

A Long-Termist’s Answer

At the mid-year performance briefing in 2025, CMB President Wang Liang predicted that the bank would achieve steady progress and a gradually improving development trend quarter by quarter. In 2025, CMB’s revenue and net profit growth rates increased quarter by quarter, achieving positive year-over-year growth throughout the year. Net fee and commission income grew by 4.39% YoY, marking the first positive growth since 2022; net interest margin was 1.87%, ROAA was 1.19%, ROAE was 13.44%, non-performing loan ratio was 0.94%, and provision coverage was 391.79%, with core indicators continuing to lead the industry.

This report not only responds to Wang Liang’s outlook for CMB’s development in 2025 but also underscores its commitment to long-termism amid adversity.

Currently, the banking industry faces multiple challenges such as low interest rate environments, severe risk situations, and changing financing demands. According to data disclosed by the People’s Bank of China and the China Banking and Insurance Regulatory Commission, by the end of 2025, the growth of RMB loans to the real economy had been negative for two consecutive years. Newly issued corporate loans and personal housing loans had interest rates dropped to around 3.1%. The net interest margin of the banking sector declined to 1.42%, while the average non-performing loan ratio of commercial banks reached 1.5%.

Jamie Dimon, CEO of JPMorgan Chase, wrote in a letter to shareholders: “We are committed to the long term, managing the cycle, and always preparing for the toughest moments. Outstanding companies may seem vastly different on the surface, but the underlying logic driving their success is often surprisingly similar.” Facing severe challenges, CMB is also committed to long-term victory.

Reviewing the content of speeches and market exchanges by CMB Chairman Miao Jianmin and President Wang Liang over the past two years reveals repeated mentions of words like adhering to principles, seeking progress steadily, prudent growth, balanced development, and capability enhancement—reflecting CMB’s desire to be more stable and resolute strategically, while continuously breaking through in capability building to respond to external “uncertainties” with “certainty” in its abilities.

From 2020 to 2025, CMB’s operating income grew from 290.48B yuan to 337.53B yuan, and net profit from 97.96B yuan to 151.13B yuan, with compound growth rates of 3.05% and 9.06%, respectively. Although performance fluctuated over these five years, in the long run, the five-year compound growth rate remains among the top of domestic large and medium-sized listed banks, confirming Wang Liang’s statement: “Bank management is a marathon race, testing the resolve and endurance to stay steady and far-reaching.”

Notably, in the 2025 “Global Top 1000 Banks” list published by The Banker magazine in the UK, CMB rose from 10th place last year to 8th in terms of Tier 1 capital. Capital is the portion of a bank’s own funds used to bear risks and absorb losses, serving as the foundation of prudent management and a reflection of overall strength. When CMB was founded in 1987, it had only 100 million yuan in capital; 39 years later, its total capital had increased to 1.38 trillion yuan, making it the “youngest” among the top 10 global banks by Tier 1 capital.

Becoming “the youngest” relies on long-term competitive advantages. For example, the bank’s deposit cost rate is low; in 2025, the proportion of demand deposits was 50.79%, with an average deposit cost rate of 1.17%, maintaining the highest net interest margin among large and medium-sized domestic banks. In wealth management, CMB has built a value cycle chain of “wealth management, asset allocation, specialized asset management, and asset custody,” and insists on providing professional asset allocation from a market-wide perspective. By 2025, its assets under management (AUM) exceeded 17 trillion yuan, with an annual increase of over 2 trillion yuan, and the number of wealth-holding clients surpassed 64 million. Known for strict risk control, CMB’s asset quality has remained excellent, with non-performing loan rates below 1% in recent years, and in 2025, its non-performing rate was among the best in large and medium-sized listed banks domestically, with a high provision coverage ratio. Its technological capabilities are also notable, with industry-leading investment in technology, a solid technical foundation, and innovative products and services, supporting improvements in customer service quality and differentiated competitive advantages.

Undoubtedly, these strengths are the foundation of CMB’s long-term perseverance in adversity and will serve as important benchmarks for its future development.

The Voyage of the “Four Modernizations” Transformation

Management guru Peter Drucker once said: “No one can control change; only those who are ahead of change can influence it.” The low interest rate environment has become the biggest “gray rhinoceros” facing the banking industry today, and no bank can remain unaffected.

CMB was among the early banks to pay attention to the impact of the low interest rate cycle and proposed a “Four Modernizations” transformation strategy last year. Wang Liang believes that promoting internationalization, integration, differentiation, and digital intelligence transformation will help CMB diversify income, stabilize business, navigate the low interest rate cycle, enhance competitiveness, and provide stable, sustainable returns to shareholders.

Internationalization is viewed as a key direction for extending customer service reach and broadening income sources. In recent years, the trend of Chinese enterprises going global and residents’ global asset allocation has become more pronounced, increasing demand for financial services from Chinese institutions. CICC’s research report suggests that successful international expansion enables Chinese institutions to maintain or expand high-quality client bases, improve risk pricing and service capabilities, which will be reflected in the profit and loss statement. CMB’s international presence, cross-border service system ranks just behind a few state-owned banks, giving it certain advantages, but it also faces complex and volatile international environments. Miao Jianmin emphasized that, on the basis of ensuring safety, CMB should accelerate high-quality overseas development according to local conditions; focus on “going global” strategies and cross-border asset allocation for residents; and accelerate building a globally integrated service system. By 2025, CMB’s overseas assets grew by 12.88%, and operating income increased by 33.80% YoY, both exceeding the bank’s overall asset and revenue growth rates; key cross-border businesses such as foreign-related payments and financial market transactions grew by 12.96% and 20.20%, respectively, showing good momentum. These data outline the trajectory of CMB’s internationalization, which is accelerating.

Integration is an important measure for CMB to adapt to changing customer demands and enhance operational resilience. From the experience of international financial development, low interest rate cycles often coincide with accelerated capital market development, deepening direct financing, and exploding comprehensive financial needs. Through integrated development, banks can improve comprehensive service capabilities, increase non-interest income, and diversify revenue streams. For example, after the Fed’s 2019 rate cut cycle, JPMorgan Chase’s retail and commercial banking revenues, mainly driven by net interest income, declined, but its investment banking, wealth management, and asset management sectors, driven mainly by non-interest income, grew against the trend. CMB’s integrated layout has a long history and is one of the few domestic banks with a full set of financial licenses. In 2025, CMB obtained a license for a financial asset investment company (AIC). Currently, the bank is focusing on leveraging its multiple licenses, strengthening coordination between head offices and subsidiaries, and enhancing core capabilities and comprehensive services of subsidiaries. By 2025, the total assets of its eight main subsidiaries increased by 11.43% from the beginning of the year, with a 12.26% share of operating income—up 1.97 percentage points from the previous year—making integration a new growth engine.

From retail to technology leadership, from attentive service to large wealth management and integrated investment and merchant banking services, CMB’s differentiated branding has always been prominent. This is also a key source of its core competitiveness. The low interest rate environment demands higher differentiation. If banks merely compete on price, scale, or homogeneity, it will distort market signals, accumulate financial risks, and be unsustainable. The US banking industry has endured multiple low interest rate cycles, with leading institutions exemplifying differentiation—Wells Fargo excels in retail and small business services, Citibank leads in international operations, and JPMorgan Chase is known as a “universal bank.” CMB’s differentiation focuses on business and regional strategies. In business, it leverages its retail advantages to promote balanced development across four major sectors and to create new competitive advantages in more niche areas. By 2025, its competitiveness in large wealth management, credit cards, fintech, green finance, inclusive finance, investment banking, financial markets, and bill services will be further enhanced—for example, the daily average balance of corporate wealth management products increased by over 31% YoY, and bill discounting business ranked second in the market. Regionally, CMB aims to deepen its presence in key areas like the Yangtze River Delta and Pearl River Delta, actively exploring local development potential and accelerating growth. By 2025, key regional branches’ main indicators—client base, AUM, core deposits, corporate loans—achieved higher growth rates.

Long-term, digital intelligence is not only a crucial driver for CMB to smoothly navigate low interest rate cycles but also likely its key to winning the future. Among 4,400 US commercial banks, 54% have deployed large models; JPMorgan Chase is accelerating to build the world’s first “full AI-driven” large bank. Miao Jianmin stated that CMB should focus on forming a systematic AI competitive advantage, promoting AI from a tool to a core service, and accelerating the development of intelligent banking. Wang Liang also proposed the “AI First” concept internally, aiming to prioritize, lead, and pioneer AI investments and applications, rapidly building digital capabilities. By 2025, CMB’s daily token throughput increased 10.1 times compared to 2024, with 183 specialized domain models implemented; 856 AI applications in retail, wholesale, risk management, and operations saved 15.56 million hours of manual work. To seize the high ground of intelligent transformation, CMB must accelerate turning AI from an auxiliary tool into a core capability and service kernel.

The New Era of CMB’s Model

While products, services, strategies, and processes are easy for peers to imitate, the management model rooted in organization, teams, culture, and mechanisms is a systemic capability—an essential safeguard of a bank’s core competitiveness.

In its annual report speech, Wang Liang stated that CMB aims to create a new “CMB Model” in the new era, including deepening reforms of the modern corporate system, improving modern corporate governance and market-oriented incentive and restraint mechanisms, and establishing a high-quality development model characterized by “strict management and integrity innovation,” as well as balanced, coordinated development across its four major business sectors, and a “people + digital intelligence” operation and service model.

CMB is a product of reform and innovation. From its inception, it established a sound corporate governance system and market-oriented mechanisms, such as the “Chairman responsible for the bank under the leadership of the Board of Directors” system and the “Six Capabilities” incentive and restraint mechanism. In the early 1990s, when media explored the “secrets” behind CMB’s rapid growth shortly after its founding, they summarized these institutional innovations as the “CMB Model.”

Today, as CMB approaches its 35th anniversary, it hopes to inject new connotations into the CMB Model, building a new “code” covering corporate governance, incentive mechanisms, development and business models, operations, and services.

It is noteworthy that CMB has already made in-depth explorations in “strict management, integrity innovation,” balanced development of its four major sectors, and “people + digital intelligence.”

In recent years, CMB has proposed building a “standardized, refined, empowering, systematic, and scientific” management system, improving management levels in risk, asset-liability, total costs, operations, and services. By 2025, its non-performing loan ratio and cost-to-income ratio had decreased by 0.13 and 1.32 percentage points compared to 2020. In terms of innovation, CMB emphasizes technological innovation to drive product, service, business, and model innovation, accelerating the exploration of “AI + finance.” For example, its “Lightning Series” domestic trade finance products significantly improve short-term financing efficiency; in 2025, the volume of domestic trade finance reached 1.64 trillion yuan, up 9.56% YoY.

In terms of balanced development across four major sectors, by 2025, CMB’s retail customer base exceeded 220 million, corporate clients surpassed 3.6 million, with growth rates of 6.67% and 14.40%, respectively. Retail financial contributions continued to account for over 50%, while corporate finance and investment banking capabilities were further strengthened. Asset management and custody scales reached 4.71 trillion yuan and 26.09 trillion yuan, maintaining top-tier positions domestically.

Regarding “people + digital intelligence,” CMB’s online channels, such as its two main apps, feature high customer activity and rich product functions, forming the foundation for online-offline integrated services. The bank also continues to upgrade intelligent services to improve management and customer experience.

Wang Liang concluded his annual report speech: “The ‘not confused’ state is a more clear-headed calmness and a more determined stride forward.” With excellent performance, a long-term answer, and persistent competitive advantages, CMB is more confident and composed as it moves toward its next chapter. Meanwhile, its ongoing transformation, steadfast progress, and cycle navigation will undoubtedly meet greater market expectations.