Dividend yield of 5.7% crushes savings? Industrial Bank's net profit last year was 77.4 billion yuan, with a full-year dividend payout of 22.56 billion yuan, as the interest margin continues to narrow.

Source: Times Finance Author: He Xiulan

On the evening of March 26, Industrial Bank (601166.SH) released its 2025 annual report. Against the backdrop of a continuously narrowing interest margin in the industry, the bank has achieved positive profit growth for two consecutive years.

According to the financial report, during the reporting period, Industrial Bank’s total assets exceeded 11 trillion yuan, achieving operating income of 212.741 billion yuan for the year, a slight increase of 0.24% year-on-year; net profit attributable to shareholders was 77.469 billion yuan, a year-on-year increase of 0.34%, outperforming the overall performance of joint-stock banks.

However, pressures such as a narrowing net interest margin and declining investment income also persist. During the reporting period, Industrial Bank’s net interest income saw growth, and the structure of non-interest income continued to optimize, with net fee and commission income increasing against the trend by 7.45%; affected by factors like declining asset yield, the net interest margin narrowed by 11 basis points year-on-year to 1.71%, but the bank effectively mitigated margin pressure by implementing a “liabilities-first” strategy to reduce deposit costs.

In terms of cash dividends, Industrial Bank plans to distribute a cash dividend of 5.01 yuan (tax included) for every 10 shares at the end of 2025, combined with the interim distribution of 5.65 yuan (tax included) for every 10 shares, totaling a cash dividend distribution of 22.56 billion yuan for the year, with the cash dividend ratio surpassing 30% for the first time. This plan will be implemented after approval at the company’s 2025 annual shareholders’ meeting.

On March 27, Industrial Bank’s A-shares closed at 18.70 yuan per share, resulting in a dividend yield of 5.70% based on the latest closing price.

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Narrowing interest margin, pressure on non-interest income

From the profitability perspective, growth pressure may arise from the narrowing net interest margin. Financial report data indicates that in 2025, the bank’s net interest margin was 1.71%, although it decreased by 11 basis points year-on-year, the decline was better controlled than the industry average; the net profit margin was 1.50%, down 6 basis points year-on-year.

The decline in asset yields may be the reason for the narrowing margin. In 2025, the average yield on corporate and personal loans at Industrial Bank dropped from 4.20% to 3.59%, with personal loan yields declining by as much as 90 basis points.

Industrial Bank’s Chairman, Lv Jiajin, introduced at the earnings release on the morning of March 27 that in recent years, the overall asset yields of commercial banks have been in a downward channel. Industrial Bank insists on controlling liability costs as a top priority for stabilizing the interest margin, taking multiple measures to reduce liability costs, including diligently implementing the deposit interest rate self-discipline mechanism, and actively replacing high-rate fixed deposits. The year’s liability interest rate decreased by 43 basis points year-on-year.

In this context, Industrial Bank has effectively controlled liability costs, with significant results in optimizing the deposit structure. In 2025, the deposit interest rate was 1.65%, down 33 basis points year-on-year, with interest rates for corporate deposits, retail deposits, and interbank deposits reduced by 34 basis points, 31 basis points, and 59 basis points, respectively. The “liabilities-first” strategy has shown results, effectively alleviating the pressure from the narrowing margin.

Despite the significant improvement in liability costs, it is still difficult to fully offset the decline in asset yields, putting further pressure on the net interest margin and posing a challenge for profit growth in 2026.

From the perspective of operating income structure, Industrial Bank shows characteristics of “net interest income providing a floor, with slight contraction in non-interest income.” In 2025, the scale of interest-earning assets grew steadily, achieving net interest income of 148.752 billion yuan, an increase of 0.44% year-on-year, maintaining positive growth for three consecutive years.

However, affected by market interest rate fluctuations and other factors, in 2025, Industrial Bank’s non-interest net income was 63.989 billion yuan, a slight decrease of 0.20% year-on-year, primarily dragged down by a 24.54% year-on-year decline in investment gains and losses, and despite a significant increase of 160.06% in fair value changes, it still could not fully offset the fluctuations. Nevertheless, thanks to the collaborative synergy of “large investment banking, large asset management, and large wealth management,” Industrial Bank achieved net fee and commission income of 25.891 billion yuan, a year-on-year increase of 7.45%.

Industrial Bank’s Vice President Zhang Min stated at the aforementioned earnings meeting that in 2026, Industrial Bank will promote the steady development of wealth management business from two dimensions: product system and customer service. On the product side, keeping pace with market rhythm in a low-interest, high-volatility environment, on one hand, it will solidify the foundation by improving the cash and fixed-income product system, upgrading the “deposit +” matrix to cover short-, medium-, and long-term fund allocation, and optimizing the “spare change +” function to enhance idle fund management efficiency; on the other hand, it will empower by building a full-market product shelf and creating a pyramid-shaped product system with rights, enhancing yield elasticity with minimal rights to meet customers’ diversified asset allocation needs. On the service side, facing market fluctuations directly, it will build an asset safety base with “spare change +,” “deposit +,” and insurance, using certain returns to hedge market uncertainties; at the same time, relying on low-volatility “fixed income +” and stable FOF-type products, it will guide customers towards long-term investments and moderate participation, smoothing short-term volatility.

Total assets surpassing 11 trillion, slight increase in non-performing loan ratio

As of the end of 2025, Industrial Bank Group’s total assets reached 11.09 trillion yuan, a year-on-year increase of 5.58%, maintaining the second-largest scale among joint-stock banks.

On the asset side, as of the end of 2025, Industrial Bank’s total loans amounted to 5.95 trillion yuan, a year-on-year increase of 3.70%. As the “fourth card” that Industrial Bank has developed, the financing balance for technology finance reached 2 trillion yuan, with a loan balance of 1.12 trillion yuan, growing by 15.98% and 18.47%, respectively, compared to the end of 2024.

According to Industrial Bank’s Vice President Zeng Xiaoyang at the aforementioned earnings meeting, as of the end of 2025, the number of technology enterprises served by the bank reached 365,000, with financing for technology enterprises and technology-related industries exceeding 2 trillion yuan, a year-on-year increase of approximately 16%. If only technology loans are considered, the growth rate is even higher, ranking among the top in the industry.

In addition to traditional credit support, banks also need to connect companies with compliant capital channels. In November 2025, Industrial Bank’s AIC (Financial Asset Investment Company) was approved to commence operations by the National Financial Supervisory Administration, becoming the first joint-stock bank-affiliated AIC to be approved for operation.

Zeng Xiaoyang stated at the aforementioned earnings meeting that the establishment of AIC meets this demand to some extent. On one hand, the bank can conduct debt-to-equity swaps and equity investments through AIC, forming growth partnerships with small and medium-sized technology enterprises, leveraging the advantages of the group to provide various resource guarantees; on the other hand, through a model of linking equity, debt, and loans, the bank can better balance risk and return while also broadening its customer base. “In the next stage, Industrial Bank will fully leverage the group’s full-license advantages, including AIC, to strengthen business collaboration,” Zeng Xiaoyang said.

Xue Hongyan, a special researcher at Suzhou Bank, told Times Finance that the importance of technology finance arises from the fact that new forms of productive forces are primarily led by technological innovation, characterized by high investment, high risk, and long cycles, making traditional financial services difficult to adapt. It is necessary to rely on policy guidance to break through bottlenecks. In the future, the banking industry needs to construct a system and mechanism that adapts to technological innovation and achieve breakthroughs in both filling gaps and strengthening advantages simultaneously. Filling gaps requires improving the intellectual property evaluation system and enhancing the precision of risk pricing. Strengthening advantages should focus on digital transformation, using technological means to enhance risk control efficiency; at the same time, promoting the collaborative development of equity, debt, and loan, deepening pilot projects for equity investments in innovative enterprises, and providing comprehensive and multi-level financial support for technological innovation.

It is worth noting that in 2025, Industrial Bank’s asset quality remained generally stable but faced marginal pressure. As of the end of 2025, Industrial Bank’s non-performing loan balance was 64.251 billion yuan, an increase of 2.774 billion yuan year-on-year; the non-performing loan ratio was 1.08%, a slight increase of 0.01 percentage points compared to the previous year; the provision coverage ratio was 228.41%, a decrease of 9.37 percentage points year-on-year; the provision-to-loan ratio was 2.47%, a decrease of 0.08 percentage points year-on-year, indicating a slight decline in risk absorption capacity, but still at a relatively good level in the industry.

Additionally, in 2025, Industrial Bank focused on risk convergence in key areas. Specifically, newly incurred non-performing loans in corporate real estate decreased by 41.85% year-on-year, and new non-performing loans in credit cards decreased by 12.98% year-on-year. As of the end of 2025, Industrial Bank’s corporate real estate financing balance was 691.892 billion yuan, a decrease of 53.293 billion yuan compared to the previous year, indicating effective risk mitigation.

Lv Jiajin revealed at the aforementioned earnings meeting that in 2025, Industrial Bank continued to seek benefits from non-performing assets, recovering 16.2 billion yuan from some written-off case assets, which significantly contributed to profit growth.