Parallel dual-track! How did Postal Savings Bank of China achieve a 16% growth in middle-income deposits?

Ask AI · How does Postal Savings Bank of China’s dual-track strategy balance defense and offense?

Yiqu君

**“Delving into the core of the dual-track strategy reveals Postal Savings Bank’s meticulous approach to offense and defense: ‘Defense’ safeguards the fundamental net interest margin; ‘Offense’ drives the non-interest income second growth curve. Combining both, the bank achieves high-quality growth through cycles.”

Text｜Xu Chuanghao ** Editing｜Wang Na**

Howard Marks, founder of Oak Tree Capital, directly points out the underlying logic of business operations in Cycle: Cycles never disappear. The key to crossing cycles is not precise trend prediction but understanding the cycle stages and maintaining rational judgment amid industry challenges, thereby protecting core advantages.

Currently, China’s banking industry is in a deep adjustment phase of a low-interest-rate cycle, with persistent pressure on net interest margins becoming a common industry challenge. Traditional growth models driven by interest spread are under threat, and the industry faces the dual test of maintaining stable operations and seeking new growth points through transformation.

On March 30, at the performance release conference in Beijing for Postal Savings Bank of China (hereafter: Postal Bank), the management’s precise industry trend analysis and clear understanding of their own strengths showcased the operational wisdom and strategic resolve of this youngest state-owned major bank. President Lu Wei introduced that the bank has a solid foundation, serving 680 million customers, with numerous branches deeply embedded in communities. While achieving extensive coverage of urban and rural customers and county areas, the bank maintains low-cost liabilities, with a deposit interest payout rate as low as 1.15% in 2025, and a net interest margin of 1.66%, ranking top among state-owned banks and firmly holding the core position in traditional deposit and loan business. Meanwhile, the bank actively expands into non-interest income, with non-interest income reaching 16.15% growth in 2025. Compared to peers, such growth at this scale is hard-won.

For future deployment, Postal Bank is very determined. President Lu Wei stated at the release: “We will unwaveringly promote the ‘dual-track’ strategy—on one hand, consolidating the ‘first growth curve’ of net interest margin by maintaining reasonable growth in loans and bonds, refining management of loan and deposit pricing, and safeguarding interest margin advantages to ensure stable and improving main income sources; on the other hand, developing non-interest income as the ‘second growth curve’ through vigorous cultivation of wealth management, payment and settlement, investment banking, transaction banking, and financial markets—five major growth points—to ensure sustained new income streams. Through dual-track and integrated development, we aim for a smooth operation of the new development model.”

Delving into the core of the dual-track strategy reveals Postal Savings Bank’s meticulous approach to offense and defense: ‘Defense’ safeguards the fundamental net interest margin; ‘Offense’ drives the non-interest income second growth curve. Combining both, the bank achieves high-quality growth through cycles.

Solidifying Advantages: Net interest margin of 1.66% ranks first among six major banks

The way to benefit is to keep pace with the times. As a state-owned major bank, Postal Bank’s development always aligns with national strategies and resonates with the real economy. The core of its advantage lies in market-based asset-liability management that adapts to macroeconomic and industry trends, firmly safeguarding the ‘first growth curve’ of interest margins. This is not only a natural choice based on its own strengths but also key to maintaining operational resilience as a retail bank.

Looking at the achievements of the “14th Five-Year Plan,” Postal Bank has laid a solid foundation in scale and quality. Its assets and liabilities have exceeded 18 trillion yuan and 17 trillion yuan respectively, with loan and deposit growth outpacing the market. By the end of 2025, the net interest margin reached 1.66%, 36 basis points higher than comparable peers, with a continuous advantage expanding by 10 basis points over the past three years, maintaining an excellent industry level. Behind these advantages, Chairman Zheng Guoyu attributes the success to the bank’s “active adaptation to economic transformation, embracing industry reform, managing risks, and improving corporate governance.”

Entering the first year of the “15th Five-Year Plan,” President Lu Wei further clarified that by 2026, the bank aims to achieve “balanced, steady, and innovative” asset-liability allocation, while focusing on transforming profit models and improving liability quality to sustain its interest margin advantage.

On the asset side, Postal Bank set a target of 750 billion yuan in annual loan growth, adhering to the logic of “increasing high-yield and reducing low-yield,” reducing low-cost assets, and focusing credit resources on key sectors like “Five Major Articles,” county areas, and new growth areas. Leveraging its corporate finance “1+N” service system, it deepens in emerging fields such as new energy, new materials, artificial intelligence, and key regions like the Yangtze River Delta and Beijing-Tianjin-Hebei, achieving high-quality growth in corporate loans. Retail loans, under risk control, are steadily increasing market share, with balanced development in housing and consumer loans.

On the liability side, Postal Bank firmly maintains its low-cost deposit advantage. The deposit interest payout rate will drop to 1.15% in 2025, a significant decrease of 29 basis points from the previous year, with the latest self-operated deposit payout rate below 1%. In 2026, the bank will elevate its self-operated deposits to a strategic level, aiming for a growth target of 700 billion yuan, working from both “point” and “per capita” perspectives to further reduce funding costs.

Regarding the interest margin trend in 2026, President Lu Wei said that relying on external policy support and internal proactive management, Postal Bank is confident in maintaining its excellent interest margin level. “On the asset side, strictly adhere to self-discipline standards and control low-price business; on the liability side, optimize structure and steadily lower the payout rate; branch responsibilities will be reinforced to stabilize the loan and deposit spread as soon as possible.”

Enhancing internal strength: Retail and corporate efforts to strengthen the non-interest second growth curve

Seeking change to succeed, strategizing for progress. If maintaining advantages is about “riding the trend,” then strengthening internal capabilities is about actively breaking through development bottlenecks. Against the backdrop of deepening interest rate marketization, Postal Bank regards non-interest income as the “second growth curve,” focusing on internal cultivation of core capabilities in retail, corporate, and asset management, precisely developing five major growth points: wealth management, payment and settlement, investment banking, transaction banking, and financial markets, making non-interest income the core driver of high-quality development.

Retail banking, as a traditional strength of Postal Bank, is the main battleground for internal capacity building, with wealth management being the key to non-interest growth in retail. By the end of 2025, the bank’s personal customer AUM reached 18.3 trillion yuan, private banking clients increased by 15.79%, and non-deposit AUM grew by 15% year-over-year. Income from wealth management and agency fund sales increased by 31.7% and 25%, respectively, maintaining retail non-interest income as a “ballast stone.” Retail Business Director Liang Shidong said that in 2026, Postal Bank will resolutely expand its private banking client base, focus on urban areas, strengthen product selection capabilities at headquarters, and deploy flexible products like fixed income+ and equity funds, aiming to double private banking clients in three years and make wealth management the core engine of retail non-interest income.

The leap from “weakness” to “strong engine” in corporate finance is a significant achievement of internal capacity building and a core support for non-interest income growth. During the “14th Five-Year Plan,” the number of corporate clients doubled, with an average annual growth rate of 57% in non-interest income over five years. In 2025, corporate non-interest income grew by 32.3%, with investment banking and transaction banking revenue increasing by 38.5% and 32.7%, respectively, raising their share in total income to 32%. It is reported that in 2026, Postal Bank’s corporate finance will focus on “low capital, low cost, high efficiency, high intelligence,” starting with corporate loans, providing comprehensive services such as letters of credit, bond underwriting, and wealth management, to generate multiple revenue streams including “net interest income + green non-interest income + trading non-interest income,” making corporate non-interest income a key driver of the second growth curve.

The asset management sector is a distinctive strength of Postal Bank’s non-interest income growth. Relying on its low loan-to-deposit ratio and asset-liability management, the bank is shifting from “profit spread” to “price spread.” Vice President Xu Xueming explained that in 2025, non-interest income reached 44.88 billion yuan, up 18.96% year-over-year, with bond and interbank CD investment yields close to 20 billion yuan. In 2026, the bank will adhere to the strategy of “rising interest rates for allocation, falling interest rates for trading,” increasing OCI and TPL account trading, and strengthening “directional trading, band trading, market-making,” further enhancing capital operation capabilities, making the fund management sector an important supplement to non-interest income growth.

The coordinated efforts of the three major sectors and the blossoming of five major growth points have turned Postal Bank’s non-interest income growth from single-point breakthroughs into multi-faceted expansion. The core is breaking down business barriers and activating internal potential, transforming customer, network, and capital endowments into growth drivers for non-interest income. This endogenous growth driven by offense is more resilient and sustainable.

Strengthening the foundation: Risk prevention and digital intelligence to activate innovation

The roots of a tree must be solid to grow long; the source must be deep to flow far. A strategic layout that consolidates advantages and internal capacity building ultimately relies on a solid underlying foundation. Postal Bank understands that the dual-track development model depends on comprehensive safeguards in risk control, digital intelligence, reform, capital, and differentiated strengths. Only by internal and external cultivation and strengthening can the path of steady and far-reaching development be ensured.

Risk control as the foundation, safeguarding the safety bottom line of development. As a state-owned major bank, stability is one of Postal Bank’s core labels. By the end of 2025, non-performing loan ratio was 0.95%, with a provision coverage ratio of 227.94%, maintaining industry-leading risk indicators. Facing industry-wide pressure on retail credit asset quality, the bank improved new loan quality through centralized approval, upgraded anti-fraud systems, and optimized customer access. In corporate loans, it continued to reduce high-risk sectors like real estate and construction, with non-performing rates in real estate and local government financing platforms decreasing by 0.36 and 0.31 percentage points respectively by 2025. In 2026, the bank will focus on “controlling incremental growth, optimizing existing stock, and preventing volatility,” deepening intelligent risk management and strengthening risk control in key areas to solidify asset quality from the source.

Digital intelligence empowering, activating innovative development. During the “14th Five-Year Plan,” the bank invested over 56 billion yuan in technology. Vice President and CIO Niu Xinzhong said that Postal Bank has built an AI innovation team of over 1,000 people, deploying more than 260 AI models across front, middle, and back offices, creating a “AI2ALL” digital ecosystem. The bond trading robot “YouXiaoBao” increased efficiency by 95%, and the bill trading robot “YouXiaoYing” handled over one trillion yuan in transactions. Intelligent review and inquiry systems have significantly improved internal operations. In 2026, the bank will leverage AI technology to develop intelligent marketing and customer service agents, deepening digital transformation and making technology an accelerator for dual-track development.

Reform breakthroughs to unleash internal vitality. In 2025, Postal Bank completed a secondary branch reform, promoted reforms of primary branches and sub-branches, and centralized operations for consumer credit and anti-fraud across the country. It also established China Post Financial Asset Investment Company and merged Postal Huiwanjia, implementing five major actions and seven reforms. These reforms greatly improved operational efficiency, with a high-quality team averaging 38 years old and 89.57% holding bachelor’s degrees or higher, providing organizational and talent support for dual-track development.

Capital as a safeguard, solidifying the financial foundation. During the “14th Five-Year Plan,” the bank received its first large-scale national capital injection, adding over 200 billion yuan of core Tier 1 capital in five years, with an additional 130 billion yuan in 2025, further strengthening its capital base. The bank emphasizes refined capital management, transitioning to a light-capital model, implementing advanced capital management laws, and improving capital efficiency, making capital a solid backing for asset-liability optimization and non-interest business expansion, supporting sustainable development.

And its differentiated strengths are a unique pillar of stability and internal capacity building. With a vast customer base of 680 million and extensive offline networks across urban and rural areas, Postal Bank holds an absolute advantage in sinking markets. Backed by China Post Group, it achieves synergy across commerce, logistics, capital, and information flows, exploring new business models like “delivery + settlement + loans” and “consumption + payments + loans,” creating a distinctive ecosystem. President Lu Wei said the bank will further amplify its network advantages, optimize branch resources, and build an organizational model of “one bank branch + N agency branches,” forming an irreplaceable core feature.

The road is long and arduous, but perseverance will lead to success; continuous effort makes the future promising. Looking ahead to the “15th Five-Year Plan,” Postal Bank, under a clear strategy of consolidating advantages and internal capacity building, will forge differentiated competitiveness, smoothly navigate cycles, and march forward with resolve.