Positive signal! Bank net interest income growth turns positive, with many major banks optimistic about the 2026 outlook.

As of now, more than 20 A-share listed banks have released their 2025 annual reports, including six state-owned big banks and nine joint-stock banks. Data show that although the net interest margin (NIM) continues to narrow, the aforementioned banks are gradually working their way out of the predicament of negative revenue growth.

Looking back over the past three years, in the low-interest-rate 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.

One positive new development is that, as the pace of NIM narrowing slows down, net interest income—which is the core component of bank revenue—improved in 2025. Many listed banks saw this indicator turn from negative to positive, helping reverse the sustained negative revenue growth trend from the prior two years. In addition, even if some banks’ revenue and net interest income still showed negative growth, the rate of decline has already narrowed significantly.

Net interest income turned positive and expanded; many banks reversed their year-after-year declines

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

Among them, these nine banks—China Merchants Bank, Pudong Development Bank, China Minsheng Bank, Huaxia Bank, Chongqing Rural Commercial Bank, Bank of Chongqing, Zhengzhou Bank, Wuxi Bank, and R&F? (瑞丰银行)—after experiencing sustained negative growth in net interest income in recent years, achieved a year-on-year turnaround to positive for the first time.

Many banks previously saw net interest negative growth even in the prior two years, but still achieved positive revenue growth supported by non-interest income such as investment gains. Among the above banks, five—China Merchants Bank, Pudong Development Bank, China Minsheng Bank, Bank of Chongqing, and Zhengzhou Bank—benefited from positive growth in net interest income, enabling their revenue to break free from prior negative growth and return to positive revenue growth in 2025.

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

However, it needs to be acknowledged that most of the above banks’ total net interest income in 2025 still did not exceed that in 2022.

Overall, among the 22 banks mentioned above, 17 achieved positive growth in revenue, including six state-owned big banks and four joint-stock banks.

In terms of performance of state-owned big banks, except for Bank of Communications, the other five state-owned big banks saw negative growth in net interest income in 2025, and the share of net interest income in revenue also declined year-on-year. Their positive revenue growth mainly relied on bond investment income and fee and commission income.

But signs of marginal improvement are emerging. The rate of decline in net interest income slowed in 2025 for Industrial and Commercial Bank of China, China Construction Bank, Bank of China, and Postal Savings Bank of China compared with 2024. For instance, the decline in ICBC’s net interest income in 2024 was 3%, while the figure for 2025 was only a 0.36% year-on-year decline.

Big banks: average yield on corporate loans breaks “3”

In 2025, driven by the LPR cut and market interest rates staying low, the yield on interest-earning assets at commercial banks continued to fall.

The annual reports show that in 2025, the average yields of corporate loans at Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank all collectively fell into the “2-handle” range. Even though personal loans remained in the “3-handle” range, overall asset-side yields continued to trend downward. By contrast, the loan yields of joint-stock banks and small- and medium-sized banks remained above the “3-handle” range.

Taking Agricultural Bank as an example, in 2025 the bank achieved net interest income of 569.59B yuan, accounting for 78.5% of full-year operating income, but down 11.0984 billion yuan from the prior year. Although its scale growth helped increase net interest income by 44.05B yuan, changes in interest rates led to a decrease of 55.15B yuan in net interest income. From the bank’s credit assets, the average yield on corporate loans fell from 3.34% in 2024 to 2.88% in 2025, a decline of 46 basis points, resulting in net interest income from loans and advances to decline by 7.9% year-on-year.

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

For example, when analyzing Pudong Development Bank’s interest income structure, both the loan interest income and investment interest income actually declined year-on-year, but net interest income still achieved positive growth because the bank lowered costs on the liability side.

According to statistics compiled by Securities Times reporters using Wind data, among the 22 banks above, the average deposit cost ratio in 2025 dropped sharply by 34 basis points year-on-year, a much larger reduction than the 15 basis points in 2024 and the 3.5 basis points in 2023.

Among them, multiple banks—including Ping An Bank, Bank of Communications, Minsheng Bank, Zhejiang Commercial Bank, Everbright Bank, Qingdao Bank, Zhengzhou Bank, Wuxi Bank, Zhangjiagang Bank, and R&F? (瑞丰银行)—saw their average deposit cost ratio in 2025 break below “2,” with the reduction generally in the range of 33 to 42 basis points.

In addition, the average deposit cost ratio of Postal Savings Bank, China Merchants Bank, China Construction Bank, Agricultural Bank, ICBC, and Chongqing Rural Commercial Bank was pushed down to below 1.5% in 2025. Among them, the lowest average deposit cost ratio was at Postal Savings Bank, at 1.15%.

As the NIM contraction narrows further and the pace of the decline keeps easing, many big banks look favorably on 2026

Currently, although banks’ NIM is still narrowing, the magnitude of the decline has already slowed down notably. Many listed banks’ management have issued positive signals, and they expect NIM to stabilize in 2026, and even to reach a turning point into positive growth.

China Construction Bank’s 2025 NIM was 1.34%. Its year-on-year decline narrowed by 2 basis points, and the quarterly decline also showed a marginally narrowing trend.

Regarding these changes, at the bank’s performance briefing, China Construction Bank’s Chief Financial Officer, Sheng Liurong, said that the narrowing of the marginal decline can be attributed to three factors: first, the repricing of existing loans has gradually been completed, easing the pressure on the decline in loan yields; second, a concentration of higher-yielding time deposits is maturing, and the interest rate paid on general deposits has dropped significantly, which to some extent offsets and slows the impact of the decline in loan yields on NIM; third, effective active asset-liability management—on the asset side, the bank further increases the proportion of higher-yield financial investments within interest-earning assets. On the liability side, it strengthens efforts to expand general demand deposits and low-cost financial interbank demand deposits, while also reducing high-cost deposits.

Undoubtedly, deposit cost management remains the core lever to stabilize interest margins.

Postal Savings Bank, which has an advantage in low-cost deposits, has raised its self-operated deposits to a strategic level. At the bank’s 2025 performance briefing, its president, Lu Wei, said that last year the bank’s deposit growth was 8.2%, and self-operated deposits hit a new high in recent years. In newly added deposits, their share exceeded 40%, helping drive a 17-basis-point decline in the cost of incremental funds.

Lu Wei disclosed that the bank further promoted the downward movement of liability costs. Its latest self-operated deposit interest rate payable is below 1%, representing high-quality low-cost funds. “The bank has nearly 75 million self-operated outlets; if deposits per outlet increase by 15%, it could lead to a 10-basis-point decrease in the cost of deposits added that year, creating more room for benefit.”

Agricultural Bank achieved 2% year-on-year growth in net interest income in 2024, but saw another year-on-year decline of 1.91% in 2025. However, regarding how to look ahead to this year’s NIM and revenue growth trends, Agricultural Bank’s president Wang Zhiheng said he is optimistic about the bank’s 2026 operating outlook, noting that the trend of NIM stabilizing is clear.

Wang Zhiheng said that based on the situation in the first two months of this year, the year-on-year growth rate of the bank’s net interest income has turned positive, and it is expected to reach a turning point in the first quarter, further confirming the positive changes in the trend of NIM. Against this backdrop, the trend of operating income continuing to improve is evident.

As for the outlook for NIM in 2026, Liu Chenggang, Deputy President of Bank of China, is fairly confident. For 2026, Liu Chenggang expects the year-on-year decline in Bank of China’s NIM to narrow significantly, and net interest income is expected to achieve positive growth. In the face of a low interest-rate environment, Liu Chenggang said the bank is confident in capturing opportunities in the market brought about by the implementation of a package of incremental policy measures, fully leveraging its global presence advantages and integrated business characteristics, and doing solid work on the comprehensive balancing of “volume, price, risk, and efficiency,” further strengthening its operating resilience and ability for sustainable development.

Proofread by: Gao Yuan