Non-interest income becomes a decisive factor: joint-stock banks in 2025 "Competing for dominance, struggling at the bottom"

◎ Reporter Ma Min

Differentiation and transformation have been the key themes in the development of joint-stock banks in recent years.

Over the past year, amid a challenging operating environment, the “feel on the ground” for joint-stock banks has been broadly similar: declining market share, pressure on net interest margins, and lingering concerns about risks. However, under the same themes, the operating results have diverged significantly.

Among nine A-share listed joint-stock banks, only China Merchants Bank, Industrial Bank, and Pudong Development Bank achieved growth in both revenue and net profit. Meanwhile, Ping An Bank, Everbright Bank, Huaxia Bank, and Zheshang Bank saw declines in both revenue and net profit.

“Three Titans in Corporate Business”—each one chasing the other

In terms of scale, China Merchants Bank, Industrial Bank, CITIC Bank, and Pudong Development Bank have consistently remained in the top-tier group of joint-stock banks, with total asset sizes all exceeding 10 trillion yuan. China Merchants Bank sits firmly in the “number one seat” thanks to its retail advantage, while Industrial Bank, CITIC Bank, and Pudong Development Bank “chase after one another” in the “three titans in corporate business” race.

By scale, Industrial Bank surpassed 10 trillion yuan in total assets in the fourth quarter of 2024. One year later, in the fourth quarter of 2025, CITIC Bank and Pudong Development Bank also surpassed 10 trillion yuan. At the end of the third quarter of 2025, Pudong Development Bank and CITIC Bank differed in asset size by only 5.9 billion yuan. But in the fourth quarter, their asset-size gap widened to 49.2 billion yuan.

In terms of revenue generation, China Merchants Bank continued to “lead the pack” with revenue of 100k yuan. In 2025, CITIC Bank and Industrial Bank’s operating income was 100k yuan and 100k yuan, respectively—only a difference of 266 million yuan. Yet after deducting various expense outlays, Industrial Bank’s net profit attributable to shareholders was higher by 337.53B yuan. This shows that cost reduction and efficiency improvement are non-optional choices, and have become a profit source that banks have to “pinch.”

Contrasting sharply with the competition among the top-tier banks, the weaker tail-end joint-stock banks are still struggling in the mud, and each has its own troubles.

Due to heavier historical burdens, China Minsheng Bank has increased the力度 of provisions for reserves. Although its revenue grew year over year by 4.82%, its net profit attributable to shareholders still declined by 5.37%.

In addition, the year-over-year declines in both revenue and net profit affected Ping An Bank, Everbright Bank, Huaxia Bank, and Zheshang Bank, and they have not yet returned to a benign growth track characterized by simultaneous improvement in scale and efficiency.

Non-interest income becomes the deciding factor

In a low interest rate environment, net interest margin—the core profitability indicator—keeps trending downward. Banks’ interest income base is difficult to stabilize, and the logic of “making up for price with volume” is no longer sustainable. Non-interest income has already become the deciding factor.

The downward trend in net interest margins has not changed. For example, by the end of 2025, the year-over-year net interest yield declines for Everbright Bank and CITIC Bank were 14 basis points, with significant declines, mainly driven by lower asset yields.

However, some banks have shown signs that their net interest margins are stabilizing: by the end of 2025, Pudong Development Bank’s net interest margin was flat compared with the start of 2024. Minsheng Bank’s net interest margin “rose against the trend” by 1 basis point, mainly due to cost control on the liabilities side.

On the non-interest income front, CITIC Bank has achieved positive growth for six consecutive years. At a performance briefing, CITIC Bank’s Chairman Fang Ying explained that over the past five years, the share of the bank’s non-interest income increased by 9.3 percentage points.

Stepping up efforts in wealth management business is an effective way to make up for middle-income shortfalls, and it also tests banks’ capability in operating with light capital.

Against the backdrop of persistently weak demand for retail credit, China Merchants Bank still upholds its retail “moat.” In 2025, net fee and commission income grew year over year by 4.39%, including wealth management fee and commission income up 21.39% year over year. Its net interest margin also remained at a relatively high level among its peers at 1.87%.

Although Ping An Bank has experienced “pain in the tunnel” during its retail transformation, the bank says it has already seen “light at the end of the tunnel”: as the transformation progress reached 70%, the contribution of net profit from retail finance hit the bottom and began to rebound.

However, if non-interest income relies only on investment gains, it is vulnerable to volatility in financial markets. Ping An Bank is affected accordingly, leading to declines in non-interest net income from businesses such as bond investments.

How to get through the cycle

In terms of asset quality, joint-stock banks are generally stable.

Over the past year, joint-stock banks have commonly increased the力度 of disposing of non-performing assets. However, by the end of 2025, the non-performing loan ratios of Industrial Bank, Everbright Bank, and Minsheng Bank were higher than at the end of 2024. In addition, the non-performing loan ratios for individuals at multiple joint-stock banks also rose, and the risk pressures in consumer loans and mortgage loans cannot be ignored.

The “cash pool” for adjusting the provision coverage ratio—often, so-called “financial engineering” can be used to beautify financial statements. It is worth noting that by the end of 2025, Huaxia Bank’s provision coverage ratio fell to 143.30%, down 18.59 percentage points from the end of 2024; Zheshang Bank’s provision coverage ratio was 155.37%, down 23.30 percentage points from 178.67% at the end of 2024. Both have hovered near the “warning line” of around 150%.

In recent years, the growth rate of performance among the banking sector has slowed somewhat; it can be said that they are “surviving in the gaps.” This is because, on one side, state-owned big banks “move downward to take top picks,” and on the other side, city commercial banks have caught up by leveraging local advantages. Under “pressure on both ends,” joint-stock banks’ market share has declined year by year.

Regarding this year’s operating conditions, many joint-stock banks have said that it is “hard to be optimistic,” and challenges still remain.

That said, based on publicly available information from recent earnings briefings, joint-stock banks also appear to have new thinking in their strategic playbooks. China Merchants Bank focuses on “retail, starting anew,” Ping An Bank vows to “return to growth,” and Industrial Bank steps toward being a “value bank”… Joint-stock banks have generally begun to think about what “the ability to get through the cycle” really means, and what impact it will have on their operations next. Let’s wait and see.

(Editor: Qian Xiaorui)

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