Bank of China expects net interest income to grow positively this year

Bank of China (03988) reported that last year’s net interest margin was 1.26 basis points, narrowing by 14 basis points year over year. Liu Chenggang, Deputy Governor of Bank of China and Secretary to the Board of Directors, said at the earnings release meeting that since the second half of the year, the group’s net interest margin on foreign currency has stabilized and rebounded, driving the overall net interest margin to be level with the first half. In the second half, net interest income recorded positive year-on-year growth and also positive growth compared with the first half. Liu Chenggang expected that in 2026, the year-over-year decline in the group’s net interest margin will narrow significantly, and that net interest income is expected to achieve positive growth.

Liu Chenggang said that in 2025 the group increased asset deployment, enhanced allocation efficiency, seized market opportunities, and increased the proportion of the group’s bond investments in earning assets by 2.1 percentage points year over year, including growth of more than 20% in foreign-currency bond investments. At the same time, the group reduced interest expense, advanced self-discipline management of deposits, and lowered the overall cost of funds by 37 basis points, with the improvement being the largest in recent years.

In addition, the bank allocated funds globally to improve the efficiency of foreign-currency usage, connecting domestic and overseas capital allocation channels. The asset scale of overseas institutions has been growing steadily, and the share of core assets such as bonds and loans in total overseas assets increased by 0.9 percentage points.

Looking ahead to this year, Liu Chenggang noted that the external environment currently has multiple uncertainties; international geopolitical changes have pushed up oil prices, compressing the room for major currencies to cut interest rates; and the domestic banking industry is still facing a low-interest-rate environment. Bank of China will expand its “go global” customer base, promote the sustained growth of overseas institutions’ loan and bond business, and improve its earnings level. Meanwhile, the rapid growth of low-cost funding in China will provide strong capital support for the development of overseas institutions.

He added that currently, market expectations for a U.S. interest-rate cut have fallen sharply. Bank of China has already made forward-looking, dynamic arrangements, and the adverse impact of further U.S. interest-rate cuts has been basically eliminated. At the same time, it will strengthen interest-rate sensitivity management and take multiple measures to mitigate the impact of falling interest rates on the net interest margin.