Multiple banks' annual reports send positive signals; net interest margin is expected to stabilize this year.

As of now, more than 20 A-share listed banks have disclosed their 2025 annual reports, including 6 state-owned large banks and 9 joint-stock banks. Data show that although net interest margins continue to narrow, these banks are gradually working their way out of the predicament of negative revenue growth.

Over the past three years, amid the low net interest margin environment, banks’ non-interest income has played an important supporting role, effectively offsetting the revenue gap caused by the decline in net interest income.

A positive change is that, as the pace of net interest margin narrowing slows down, net interest income—an essential component of banks’ revenue—saw an improvement in 2025. Multiple listed banks turned this metric from negative to positive, helping reverse the trend of continuous negative revenue growth that persisted in the prior two years. In addition, even if some banks’ revenue and net interest income still had negative growth, the rate of decline has already narrowed significantly.

Net interest income turning positive expands

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

Among them, nine banks, including China Merchants Bank, Pudong Development Bank, Minsheng Bank, Huaxia Bank, Chongqing Rural Commercial Bank, Chongqing Bank, Zhengzhou Bank, Wuxi Bank, and RICH & FEN (RuiFeng) Bank, achieved a year-over-year turnaround to positive for the first time after net interest income had remained in negative growth in recent years.

Many banks saw negative growth in net interest income in the previous two years, but still achieved positive revenue growth supported by non-interest income such as investment income. Of the banks mentioned above, five banks—China Merchants Bank, Pudong Development Bank, Minsheng Bank, Chongqing Bank, and Zhengzhou Bank—escaped the negative revenue growth trend in 2025 by returning to positive growth in net interest income.

For example, China Merchants Bank, against the backdrop of two consecutive years of year-over-year declines in net interest income, saw operating income fall by 1.64% and 0.48% in 2023 and 2024, respectively. In 2025, the bank’s net interest income grew by 2.04% year over year, ultimately driving full-year operating income to achieve a marginal positive growth of 0.01%.

That said, it needs to 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 mentioned above, 17 achieved positive revenue growth, including 6 state-owned large banks and 4 joint-stock banks.

From the performance of state-owned large banks, except for Bank of Communications, the other five state-owned large banks all recorded negative growth in net interest income in 2025, and the share of net interest income in revenue also declined year over year. Their positive revenue growth mainly relied on bond investment income and fee and commission business income.

Large banks: average yield on corporate loans breaks above “3”

In 2025, affected by the LPR cut and market interest rates remaining at low levels, commercial banks’ yields on interest-earning assets continued to decline.

According to annual report data, in 2025, the average yield on corporate loans at Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China collectively fell to the “2” handle. Although personal loans still remained in the “3” handle, overall asset-side yields continued to trend downward. By contrast, the loan yields of joint-stock banks and small- and medium-sized banks remained at above the “3” handle.

Taking Agricultural Bank of China as an example, it achieved net interest income of RMB 569.594 billion in 2025, accounting for 78.5% of full-year operating income, but this was down RMB 11.0984 billion from 2024. Although the bank’s scale growth helped increase net interest income by RMB 44.049 billion, changes in interest rates led to a reduction of RMB 55.147 billion in net interest income. From the bank’s credit assets, the average yield on corporate loans decreased from 3.34% in 2024 to 2.88% in 2025, a drop of 46 basis points, which caused interest income from loans and advances issued by the bank last year to fall by 7.9% year over year.

The key to supporting some banks’ net interest income growth lies in synchronized cost control on the liability side.

Taking Pudong Development Bank as an example, in the structure of its interest income, both loan interest rate income and investment interest income declined year over year, but net interest income still grew positively, because the bank reduced costs on the liability side.

According to Wind data, among the 22 banks mentioned above, the average deposit cost rate in 2025 fell sharply by 34 basis points year over year, a decline significantly larger than the 15 basis points in 2024 and 3.5 basis points in 2023.

Among them, many banks, including Ping An Bank, Bank of Communications, Minsheng Bank, Zheshang Bank, Everbright Bank, Qingdao Bank, and Zhengzhou Bank, saw their average deposit cost rate in 2025 break the “2” level, with declines mostly in the 33 to 42 basis point range.

In addition, the average deposit cost rate in 2025 for Postal Savings Bank of China, China Merchants Bank, China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China, and Chongqing Rural Commercial Bank has been compressed to below 1.5%. Of these, Postal Savings Bank of China had the lowest average deposit cost rate at 1.15%.

Many large banks are optimistic about this year’s outlook

Currently, while the industry’s net interest margin is narrowing, the pace of decline has clearly slowed. Management teams of multiple listed banks have released positive signals, and many expect net interest margins to stabilize in 2026.

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

Regarding these changes, Cai Lingrong, chief financial officer of China Construction Bank, said at the bank’s performance briefing that the narrowing of the marginal decline is attributable to three factors: first, re-pricing of existing loans has been gradually completed, easing the downward pressure on loan yields; second, time deposits with relatively higher costs are concentrated at maturity, while the interest rate paid on general deposits falls significantly, to some extent offsetting and mitigating the impact of declining loan yields on net interest margins; third, effective proactive asset-liability management has been implemented—on the asset side, the proportion of financial investments with relatively higher returns within interest-earning assets has been further increased. On the liability side, the bank has expanded its support for general demand deposits and low-cost financial interbank demand deposits, while also reducing high-cost deposits.

No doubt, deposit cost control remains the core lever for stabilizing interest margins.

Postal Savings Bank of China, with advantages in low-cost deposits, has raised its self-operated deposits to a strategic level. At the 2025 performance briefing, the bank’s President Lu Wei introduced that last year the bank’s deposit growth was 8.2%. Self-operated deposits reached a new high in recent years; among new deposits, their share exceeded 40%, bringing down the cost of incremental funds by 17 basis points.

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

Wang Zhiheng disclosed that based on the situation in the first two months of this year, the bank’s growth rate of net interest income turned positive year over year, and it is expected to see an inflection point in the first quarter, further validating the positive changes in net interest margins. Against this backdrop, the positive momentum in operating income is evident.

Regarding the trend of net interest margins in 2026, Liu Chenggang, vice 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 substantially, and that net interest income is likely to achieve positive growth. In a low interest rate environment, Liu Chenggang said the bank is confident in capturing market opportunities brought by the implementation of a package of incremental policy measures, giving full play to its globalized strengths and integrated characteristics, and solidly carrying out a comprehensive balance across “quantity, price, risk, and efficiency” to further enhance operating resilience and sustainable development capabilities.

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Editor: Li Linlin