Live Performance Meeting | CITIC Bank Chairman Fang Heying: Non-interest income share increased by 9.3 percentage points over the past five years

Every Daily reporter｜Zhang Shoulin    Editor｜Bi Luming

On March 23, at Citibank’s 2025 annual performance briefing, Citibank (SH601998) Chairman Fang Heying disclosed that over the past five years, the share of the bank’s non-interest income increased by 9.3 percentage points.

In addition, the bank has spared no effort in building a risk control system characterized by “effective support for development and effective risk control,” and, on the basis of creating revenue, has enhanced its risk digestion capacity. Over the past five years, the bank has provisioned 66 billion yuan each year to absorb non-performing assets.

In the face of future development conditions, Fang Heying said that strategy must follow the market. The company’s business must carry the main weight, retail business must steadily contribute, the financial markets business must increase income, and risk prevention and control must create value.

Scene at the Citibank performance briefing. Photo by Every Daily reporter Zhang Shoulin

Retail deposits: demand deposits account for 27%

At the performance briefing, Fang Heying mentioned that in 2025, Citibank’s net profit grew by nearly 3%, with its growth rate ranking among the top in large and medium-sized banks.

He said that a combo of stabilizing revenue and reducing costs opened up room for profit growth. Specifically, it is reflected in three areas of change:

First, shifting from stabilizing the net interest margin to stabilizing operating revenue. The net interest margin gradually stabilized, and the decline in operating revenue narrowed over time. Among them, the release of investment and trading capabilities and the sustained growth of net fee and commission income provide stable support for growth.

Over the past five years, the share of the bank’s non-interest income increased by 9.3 percentage points. In 2025, fee income reached 32.77 billion yuan, up 5.6%, which was an additional 2.2 percentage points higher than that of its peers, achieving both second place in industry ranking by total volume and by growth rate.

Second, shifting from a decline in the non-performing loan ratio to a reduction in credit costs. In 2025, the bank recovered 37.2 billion yuan of non-performing loans in total. The full-year credit cost ratio fell by 0.07 percentage points, and the portion of asset impairment as a share of revenue declined by 1.2 percentage points. These provided key support for growth.

Third, shifting from controlling costs to achieving “double declines” in both operating cost and cost-to-income ratio. The bank recorded a reduction of 2.25 billion yuan in operating costs for the full year. As a result, the cost-to-income ratio fell by 0.88 percentage points accordingly, contributing correspondingly to growth.

With net interest margin under pressure, more attention has been paid to liability business management. Fang Heying said that the bank achieved quantity-price balanced management of its liability business. “We will make our funding costs truly build a broad buffer band to withstand and cushion the shock from low net interest margins,” he said.

Looking through the picture, Fang Heying said that deposit structure improved. Since the bank strengthened self-discipline mechanisms for deposits, the “real demand deposits” component has risen noticeably. Retail demand deposits accounted for 27%. Although this is lower than the corporate demand deposit share, over the past two years the share increased by 3.2 percentage points. In addition, controlling high-cost liability funding has become more forceful and effective; the shares of three categories—three-year time deposits, structured deposits, and agreement deposits—are each below 32%.

He said that the development path for the liability business is relatively clear: adhere to a combination of short and long term. In the near term, liability and liability costs are guided by assessments; in the mid-term, by products; and in the long term, by systems and capabilities.

On risk control, Fang Heying said that the bank spared no effort to build a risk control system characterized by “effective support for development and effective risk control,” and that positive changes have taken place in the field of risk management. And, on the basis of creating revenue, it has enhanced its ability to digest risk. Over the five years, each year it made provisions of 66 billion yuan to absorb bad loans. In addition, by leveraging the unique advantages of Citic’s synergy-based insurance integration, it has accelerated the disposition of some key projects.

“Strategy must follow the market.”

Facing the business outlook for 2026, Fang Heying’s thinking centers on three points.

First, use the “three-three strategy” to guide continued refinement of six types of capabilities. “At the beginning of the year work meeting, we proposed that over the next five years we will implement the ‘three-three strategy,’ namely three excellence and three leading: an excellent wealth management bank, an excellent investment and trading bank, and an excellent comprehensive financing bank; a leading payment and settlement bank, a leading cross-border financial services bank, and a leading digital bank. What we pursue is to become top-tier students in the industry,” Fang Heying said.

He believes that the six types of capabilities represent a comprehensive upgrade and shifting gears for a bank’s traditional deposit-lending-remittance business. Excellence in wealth management capability extends what the bank traditionally does on the “deposit” side. Excellence in comprehensive financing and in investment and trading extends what the bank traditionally does on the “loan” side. Leading cross-border settlement capability extends what the bank traditionally does on the “remittance” side. And leading digital capability represents a remolding of the bank at the level of its genes. These six capabilities are not isolated points, but a coordinated approach to the bank’s overall operations.

Second, it is necessary to take a high-level, coordinated approach to implementing the “five major articles” of finance with Chinese characteristics, and to organically unify taking the path of socialism with Chinese characteristics with the development philosophy of value-creating commercial banks into the concrete actions to accelerate transformation and development.

“This is a major proposition. So we need to coordinate the two, speed up the pace of transformation, and, as we go deep and make the most of the ‘five major articles,’ plan the development of our commercial banks in the new era,” he said.

Third, focus on the market to optimize development strategy and build a new cross-cycle development pattern that is visible, attainable, and sustainable.

“Strategy must follow the market. We proposed at the beginning of the year that the corporate business should carry the main weight, retail should deliver stable contributions, the financial markets business should increase income, and risk control should create value,” he explained. The corporate business carries the main weight because it has the market worth carrying it, and because it also has the foundations to do so.

Retail’s stable contribution assigns it the responsibility to forge ahead despite difficulties. We need to capture the great trend of rapid expansion in the wealth management market, and ride the rise enabled by the retail development system and capabilities.

Source of the cover image: The Economic Daily News