Two Joint-Stock Banks Lead Annual Reports: Net Interest Margin Stabilization Trend Basically Established

A-shares listed banks’ 2025 annual report season kicks off, with Ping An Bank and CITIC Bank, two joint-stock banks, leading the way and presenting their respective performance reports.

Financial data shows that these two banks’ performances have both highlights and pressures: the bright spot is that the key profitability indicator, net interest margin, has stabilized after years of decline; the pressure lies in performance being under pressure, with revenue experiencing negative growth.

Their financial reports send a signal to the market that the banking sector’s fundamentals are showing signs of “bottoming out and stabilizing.” Market analysts predict that this year, driven by stabilized interest margins and the cultivation of new growth drivers, bank operations will exhibit new features of “accelerated growth and optimized structure,” with industry prosperity expected to marginally improve.

Performance Still Under Pressure, Net Interest Margin Gradually Stabilizing

The annual reports show that Ping An Bank’s revenue and net profit continued to decline: in 2025, the bank achieved revenue of 131.442 billion yuan, down 10.4% year-on-year; net profit attributable to shareholders was 42.633 billion yuan, down 4.2% year-on-year. CITIC Bank’s total assets surpassed 10 trillion yuan for the first time, with net profit attributable to shareholders increasing by 2.98% year-on-year, while operating income decreased by 0.55% year-on-year.

Regarding the revenue decline of over 10%, Ping An Bank explained that it was mainly due to factors such as declining loan interest rates and adjustments in business structure, leading to a decrease in net interest margin year-on-year; additionally, market fluctuations affected non-interest income from bond investments and other businesses.

CITIC Bank’s annual report also shows that the decline in net interest income was the main factor dragging down the bank’s revenue. In 2025, the bank’s net interest income decreased by 1.51% compared to the previous year. Although non-interest income increased by 1.55% year-on-year, it accounted for only 31.3% of revenue, making it insufficient to offset the impact of declining net interest income.

Despite the pressure from narrowing net interest margins and decreasing interest income, the trend of net interest margin stabilization has been basically established.

For example: by the end of 2025, CITIC Bank’s net interest margin was 1.63%, maintaining stability for several consecutive quarters; Ping An Bank’s net interest margin was 1.78%, down 9 basis points year-on-year, but the decline has significantly slowed.

Controlling the cost of liabilities is key to stabilizing net interest margins. For instance, Ping An Bank’s average interest-bearing liability cost in 2025 was 1.67%, down 47 basis points from 2024.

An industry insider from Zhejiang told Shanghai Securities News that the bank’s net interest margin in 2025 is expected to remain flat compared to last year. “The net interest margin has finally stabilized, mainly due to improved interest rates on liabilities; the interest rate on new loans has also gradually narrowed its decline, easing the downward pressure on asset yields.”

From the overall industry perspective, the stabilization of net interest margins is a core change for commercial banks in 2025. As of the end of Q4 2025, the net interest margin of commercial banks maintained at 1.42%, unchanged from the end of Q3, achieving three consecutive quarters of stabilization and ending the previous trend of unilateral decline.

Asset Quality Remains Steady, Non-Performing Loan Ratio Slightly Decreases

Alongside the stabilization of net interest margins, asset quality continues to improve, with the non-performing loan ratio gradually decreasing, and the loan loss provision coverage ratio slightly declining from the previous year, indicating overall manageable risks.

The annual report shows that as of the end of 2025, Ping An Bank’s non-performing loan ratio was 1.05%, down 0.01 percentage points from the end of the previous year. The bank’s retail asset quality, which has attracted market attention, has significantly improved. As of the reporting period, the bank’s personal loan NPL ratio decreased by 0.16 percentage points from the end of last year, further confirming the previous judgment that retail asset quality has reached a turning point. Based on this recovery, on March 23, Ping An Bank’s Assistant President Wang Jun stated at the earnings release that a turning point in retail business has initially appeared.

However, Ping An Bank’s corporate real estate stock risk is still being released. Wu Leiming, Chief Compliance Officer of Ping An Bank, said at the earnings conference that the real estate market in 2025 remains in a deep adjustment period, with significant pressure on corporate liquidity, and some large private enterprises are exposed to risks, which has also affected Ping An Bank.

CITIC Bank’s asset quality remains steady. As of the end of the reporting period, the bank’s non-performing loan ratio was 1.15%, down 0.01 percentage points from the end of last year, marking seven consecutive years of decline. On March 23, Jin Xinian, Vice President and Risk Director of CITIC Bank, said at the earnings release that the main pressure comes from retail loans, and retail risk pressure is a common industry issue. However, Jin Xinian also stated, “Our incremental assets have improved significantly, and the risk trend of major products is positive. We are confident that retail asset quality will stabilize quickly.”

Bank Financial Performance Expected to Outperform 2025 in 2026

Looking ahead to 2026, many institutions believe that the downward pressure on bank net interest margins will ease, and profit growth is expected to rebound.

CITIC Securities predicts that the decline in net interest margin will narrow to 3-4 basis points, marking the first year since 2022 that the decline has been reduced to a single digit. Industrial Securities believes that the continued release of the effect of deposit rate cuts on the liability side will further ease pressure on net interest margins and drive positive growth in interest income.

Several banks have also expressed relatively optimistic operational expectations. For example, Changsha Bank recently stated during institutional research that the cost of liabilities will steadily improve.

In addition to stabilizing interest margins, banks are shifting from “interest dependence” to “diversified and balanced” operations. Many banks have explicitly stated in their 2026 work meetings that they aim to explore new growth drivers, optimize income structures to cope with pressure on net interest margins, and place high hopes on wealth management, investment banking, custody, and trading intermediary businesses.

On March 23, CITIC Bank Chairman Fang Heying said at the earnings release that in 2026, the bank will focus on multiple growth points, seeking incremental gains from capital markets, cross-border finance, investment trading capabilities, wealth management, risk mitigation and recovery, new productive forces, new business models, new markets, scene and ecological enrichment, and subsidiaries.

With the combined effects of marginal relief in net interest margin pressure and the cultivation of new growth drivers, the foundation for industry profit recovery is being solidified. Ping An Securities forecasts that the overall financial performance of listed banks will outperform 2025, with an expected year-on-year increase of 2.4% in net profit in 2026.