Public Bank Annual Report Review | The Highly Watched Net Interest Margin

Ask AI · Can the steady trend of net interest margin stabilization continue, and what regulatory policy support does it provide?

In recent times, as listed banks have successively released their 2025 annual performance reports, the net interest margin and its trajectory have drawn significant attention. According to Wind data, as of March 31, 2026, 22 A-share listed banks have disclosed their 2025 net interest margins. A review by reporters from China Banking and Insurance News found that net interest margins show three characteristics: first, they still trend downward year on year overall, but the rate of decline is narrowing; second, on a quarter-on-quarter basis, many banks’ net interest margins have stabilized in phases; and third, some banks’ net interest margins are flat year on year or have increased.

At earnings release conferences of multiple listed banks, the industry’s common concern has been—has the net interest margin gradually stabilized? In response, multiple bank executives provided cautious yet optimistic answers: under regulatory guidance and factors such as the repricing of maturing time deposits on a scheduled basis, the decline in net interest margin this year is expected to narrow, and the marginal stabilization trend is becoming clear.

Multiple Banks’ Net Interest Margin Decline Narrows

In recent years, influenced by factors such as measures to share benefits with the real economy and adjustments in market interest rate levels, net interest margins have shown a trend of moving downward. Wind data shows that as of March 31, 2025, 22 A-share listed banks had disclosed their net interest margins. For most banks, their 2025 net interest margins still fell year on year, but the trend of stabilization on a quarter-on-quarter basis was evident. In addition, Chongqing Bank, China Minsheng Bank, Shanghai Pudong Development Bank, and Ruifeng Rural Commercial Bank—these four banks—saw their net interest margins rise or remain flat compared with 2024.

On a year-on-year basis, net interest margins of most banks declined, but the rate of decline narrowed. For example, among the six major state-owned banks, Postal Savings Bank’s interest margin performed relatively better. Its 2025 net interest margin was 1.66%. Through active net interest margin management, its marginal trend improved in 2025. In 2025, Industrial and Commercial Bank of China’s (ICBC) net interest margin was 1.28%, down 14 BP from 2024; the downward trend gradually narrowed, and the year-on-year decline narrowed by 5 BP.

On a quarter-on-quarter basis, some banks’ net interest margins showed a trend of phased stabilization. Of the 22 banks, 9 had net interest margins that were flat or slightly higher versus the third quarter, and 7 saw their net interest margins fall by only 2 BP compared with the first three quarters. In 2025, China Merchants Bank’s net interest margin was 1.87%, which was the highest among the 22 banks that had disclosed results. Looking at data from the previous year’s four quarters: Q1 was 1.91%, Q2 was 1.86%, Q3 was 1.83%, and the figure rebounded in Q4. After Postal Savings Bank underwent a one-time repricing-driven downward move at the beginning of last year, the decline in its net interest margin narrowed significantly; in the subsequent three quarters, it fell by only 1 BP quarter on quarter.

By expanding the sample size, the marginal stabilization performance of listed banks’ net interest margins remains consistent with the industry’s overall trend. Data released by the National Financial Regulatory Administration shows that as of the end of Q4 2025, commercial banks’ net interest margin was 1.42%, maintaining stabilization for two consecutive quarters.

Strengthen Liability Cost Control

To cope with pressure from falling interest margins, banks have worked from both the asset side and the liability side to optimize their asset-liability structure and maintain steady development. Looking at 2025, the downward trend in liability costs played a positive role in improving interest margins.

In 2025, China Construction Bank’s net interest margin was 1.34%. Judging from the change trend, the annual decline narrowed by 2 BP year on year, and the quarterly decline showed a marginal-narrowing trend.

At an earnings release conference, Sheng Liurong, Chief Financial Officer of China Construction Bank, said that the marginal decline narrowing of the bank’s net interest margin in 2025 can be attributed to three factors: first, the repricing of existing loans has been gradually completed, easing the pressure on loan yield decline. Second, time deposits with relatively high interest rates concentrated their maturities and repricing, and the interest rate on general deposits generally fell significantly, to a certain extent offsetting and slowing the impact of declining loan yields on net interest margin. Third, by conducting effective active asset-liability management, the bank optimized its asset-liability structure and mitigated the impact of the decline in loan yields on net interest margin.

It is worth noting that Minsheng Bank’s net interest margin in 2025 was 1.40%, slightly up by 1 BP compared with 2024’s 1.39%. In its annual report, Minsheng Bank analyzed that the downward trend in liability costs supported keeping the interest margin stable. Data shows that as of the end of December 2025, Minsheng Bank’s deposit interest rate for interest-bearing deposits was 1.74%, down 40 BP year on year. The average cost rate of interbank liabilities was 1.81%, down 46 BP year on year, and the interest rates on deposits and on interbank liabilities in each quarter continued to decline.

After estimating 13 banks that disclosed annual reports before March 29, 2026, analysts Xiao Feifei and Hu Jiajun from CITIC Securities said that among these 13 banks, their average yield on interest-earning assets and the cost rate of interest-bearing liabilities were 3.10% and 1.65%, respectively, down 48 BP and 44 BP year on year. The decline in pricing on both sides of assets and liabilities was fairly matched. Cost savings resulting from repricing and structural optimization on the liability side effectively offset the decline in pricing on the asset side.

Marginal Stabilization Is Expected to Continue

Regarding whether banks’ net interest margins can gradually stabilize, industry insiders believe that with the guidance toward preventing “involution” and stabilizing interest margins, interest rates on newly issued loans in 2026 are expected to stabilize. 2026 is the peak period for deposit maturities and scheduled repricing, which will help improve banks’ liability costs. Taking both the asset and liability sides into account, net interest margins are expected to stabilize in 2026.

On the one hand, policy signals to stabilize interest margins continue to be released. Lu Wei, President of Postal Savings Bank, said that for this year, the current central bank’s symmetric rate cuts, the strengthening of the self-discipline mechanism, and the General Administration’s measures to curb unfair competition can be clearly felt—there is external effort being made simultaneously, and stabilizing interest margins is generally given significant importance.

On the other hand, the repricing of time deposits provides favorable conditions for commercial banks to improve liability costs. In 2026, a batch of high-interest time deposits will be due to mature, and based on estimates by different institutions, the scale is expected to range from 50 trillion to 80 trillion.

Yang Jun, Vice President of Bank of China, introduced that since the second half of 2025, the bank’s maturing time deposit amounts have increased, and most of the matured funds still choose to remain in deposits, with a relatively high rate of rolling over time deposits. Yang Jun expects that, because current deposit interest rates are lower than those three years ago, the repricing of these deposits will help lower banks’ deposit interest expense, thereby having a positive impact on stabilizing interest margins.

Yao Mingde, Vice President and Chief Financial Officer of ICBC, judged that in 2026, the interest margin will most likely show an “L-shaped” trajectory. “We believe that the downward trend in net interest margin in the short term has not changed, but the favorable factors that drive improvement in net interest margin are continuously accumulating, and the marginal stabilization trend is expected to continue,” he said in his analysis.

Looking ahead to 2026, Ma Tingting, a researcher at Guotai Junan Securities, believes that the decline in banks’ interest margins is expected to be around 5 BP. Downward pressure will continue to ease at the margin, and some banks’ interest margins may bottom out and stabilize. Liu Chengxiang and Zhu Xiaoyun, analysts at Kaiyuan Securities, predicted that in 2026, listed banks’ net interest margins will narrow slightly by 4 BP, with the pressure for narrowing concentrated in the first half of the year.

Reporter Dong Linyang

Editor Li Haochen