Nearly half of the A-share listed banks that have disclosed annual reports did not see their net interest margins continue to decline, and industry experts expect stability this year.

Ask AI: What does an “L-shaped” trend in banks’ net interest margins mean for the industry?

Caixin—Lianhe Media, March 29 (Reporter Zou Juntao) Nearly half of listed banks that have already released their annual reports show signs that their net interest margins have stabilized.

On March 28, a Caixin—Lianhe Media reporter, based on statistics from the 东方财富 Choice data platform, as of now, 13 listed banks have disclosed their 2025 annual reports. After excluding two banks that have not disclosed third-quarter net interest margin data, of the remaining six listed banks, the net interest margin at the end of the fourth quarter was flat year-on-quarter or increased compared with the previous quarter.

From a structural perspective, local banks’ net interest margin at the end of the fourth quarter is rebounding earlier than that of national banks nationwide, while national banks maintain stable net interest margins and gradually see stabilization.

Multiple listed banks’ management teams have recently released signals that net interest margins are stabilizing. A Caixin—Lianhe Media reporter learned from recent performance briefings of listed banks that, according to some major-bank views, in 2026 banks’ net interest margins will most likely follow an “L-shaped” trajectory.

Local banks rebound; national banks stabilize

According to the latest annual report data, local banks such as RuiFeng Bank and Yu’nong Commercial Bank show a slight quarter-on-quarter increase in net interest margin at the end of the fourth quarter. Meanwhile, the net interest margin data of national banks such as ICBC, Bank of Communications, China Merchants Bank, and CITIC remain stable and do not show further declines.

The annual reports show that, as of the end of 2025, RuiFeng Bank’s net interest margin was 1.5%, up 0.01 percentage points from the end of the third quarter and up 0.04 percentage points from the end of the second quarter. In the same period, Yu’nong Commercial Bank’s net interest margin was 1.6%, also up 0.01 percentage points from the end of the third quarter and flat versus the end of the second quarter.

Regarding net interest margin stabilizing and rebounding, RuiFeng Bank said that during the reporting period, it achieved an overall stabilization of net interest margins by optimizing its asset-liability structure and precisely managing interest rate levels. During the reporting period, the bank’s deposit cost ratio was 1.83%, down 37 BP from the previous year. RuiFeng Bank said that the net interest margin after the rebound has returned to the level at the end of 2024.

Yu’nong Commercial Bank said that compared with the end of 2024, its net interest margin decreased by 1 BP year on year. The decline narrowed by 11 BP compared with the previous year. This was mainly due to balanced development across volume, pricing, and structure, with the improvement in the narrowing of net interest margin continuing.

For national banks, ICBC, Bank of Communications, China Merchants Bank, and CITIC, as reflected in their latest annual reports, show that their net interest margin data did not see further declines in the fourth quarter of last year.

According to ICBC and Bank of Communications’ annual reports, as of the end of 2025, the net interest margins of the two state-owned majors were 1.28% and 1.20%, respectively. Compared with the end of the second quarter, they decreased by 0.02 and 0.01 percentage points, respectively, and compared with the end of the third quarter, were flat on a quarter-on-quarter basis.

In addition, China Merchants Bank and CITIC Bank are the same. As of the end of 2025, the net interest margins of the two joint-stock banks were 1.87% and 1.63%, respectively. They were flat to slightly improved quarter on quarter from the end of the third quarter. Among them, CITIC Bank’s net interest margin has stayed at 1.63% for three consecutive quarters since the second quarter of 2025, while China Merchants Bank’s net interest margin also fell by only 0.01 percentage points compared with the end of the second quarter of last year.

The declines in net interest margins for several other national banks have also further narrowed. The annual reports show that, as of the end of 2025, Construction Bank, Postal Savings Bank, and Ping An Bank’s net interest margins were 1.34%, 1.66%, and 1.78%, respectively, further declining versus the end of the third quarter of last year. The decline was also limited to around 0.01 to 0.02 percentage points.

Industry view: Net interest margins are expected to further stabilize this year

What is worth noting is that since the second half of 2025, the industry has had some expectations for net interest margin stabilization. According to data from Ping An Securities, in the third quarter of 2025, the net interest margins of 25 A-share listed banks increased quarter on quarter. Among them, Minsheng Bank, Nanjing Bank, Xi’an Bank, Chongqing Bank, and Lanzhou Bank saw the largest increases, all exceeding 0.1%, at 0.11%, 0.17%, 0.15%, 0.15%, and 0.12%, respectively.

A bank-industry analyst at a securities firm recently told a Caixin—Lianhe Media reporter that looking into 2026, it is expected that banks’ net interest margins may achieve comprehensive stabilization within the year. “A sharp reduction in funding costs is one of the important factors behind the stabilization and rebound of net interest margins.” After reviewing recent annual reports from listed banks, the person said.

Open Source Securities recently published a research report stating that banks’ net interest margins in 2026 are expected to “bottom out and stabilize.” It projects that listed banks’ net interest margins in 2026 will narrow slightly by 4 BP, with pressure concentrated in the first half.

At a performance briefing for the 2025 annual report held on Friday (March 27),姚明德, vice president of ICBC, analyzed that it is expected that banks’ net interest margins in 2026 will show an “L-shaped” trend. He also said that in the short term, the downward trend in net interest margins has not changed, but favorable factors that will improve net interest margin performance are continuously accumulating, and the trend toward marginal stabilization is expected to continue.

姚明德 said, “If we do not consider scenarios where the LPR (loan prime rate) and deposit benchmark rates are further adjusted significantly, we expect our bank’s net interest income this year to turn positive year on year and reach a turning point, and the decline in net interest margin will also further converge compared with 2025.”

In addition, according to data from the National Financial Regulatory Administration, at the end of the fourth quarter of 2025, commercial banks’ net interest margin was 1.42%, which has been flat on a quarter-on-quarter basis for three consecutive quarters. Industry views suggest that regulatory-criteria data indicate that the industry’s net interest margin has shown signs of stabilization.

(Caixin—Lianhe Media reporter Zou Juntao)