Industrial Securities Research: In Q4 2025, volume growth and stable prices help banks achieve positive net profit growth

Reuters Finance APP has learned that Industrial Securities Research released a report stating that the banking industry will show positive changes in operations in 2025, with net profits achieving year-over-year growth, reversing the previous four consecutive quarters of negative growth. The net interest margin has remained steady at 1.42% for three consecutive quarters, and while it may continue to bottom out, some banks are expected to stabilize; overall asset growth has rebounded, but structural differentiation is evident. The core solvency adequacy ratio of the insurance industry also declined for two consecutive quarters, and the industry still faces certain challenges.

Industrial Securities Research’s main points are as follows:

Event

On February 12, 2026, the State Administration of Financial Supervision announced key regulatory indicator data for the banking and insurance industries in Q4 2025.

Profitability Overview

In 2025, banks achieved a total net profit of 2.38 trillion yuan, up 2.33% year-over-year, reversing the previous four quarters of negative year-over-year growth.

Net Interest Margin

In the second half of 2025, banks’ net interest margin remained stable quarter-over-quarter, becoming an important factor in the positive growth of bank profits. For the full year of 2025, the net interest margin was 1.42%, remaining unchanged for three consecutive quarters. Looking ahead, under the overall low-cost financing environment, although the net interest margin may continue to bottom out, ongoing efforts to stabilize interest margins will lead to some banks’ net interest margins stabilizing quarter-over-quarter.

Total Asset Growth

By the end of 2025, the growth rate of total bank assets had rebounded compared to the end of Q3 2025, which is also a key reason supporting the recovery of bank profits. Notably, compared to the increased asset growth rates of state-owned large banks and joint-stock banks, the growth rates of city commercial banks and rural commercial banks have declined. The slowdown in rural commercial banks’ asset growth may also be closely related to difficulties in asset deployment.

Capital Situation

Although by the end of 2025, banks’ capital adequacy ratio, Tier 1 capital adequacy ratio, and core Tier 1 capital adequacy ratio all increased compared to the end of Q3 2025, the quarter-over-quarter increases were relatively low historically.

Asset Quality

At the end of 2025, the provisioning coverage ratio of commercial banks was 205.21%, down 1.94 percentage points from the end of Q3 2025, marking two consecutive quarters of decline. Meanwhile, the core solvency adequacy ratio of insurance companies was 130.40%, down 3.90 percentage points from Q3 2025, also declining for two consecutive quarters.