Insight into Annual Reports | The six major state-owned banks earned 3.9 billion yuan per day last year—are the "money printing machines" about to shift gears?

Ask AI · The decline in net interest margins at China’s six state-owned big banks narrows—when will the earnings turning point emerge?

As banks have successively released their 2025 annual reports, the profitability of China’s six state-owned big banks has also gradually come into focus: their combined attributable net profit exceeds 1.4 trillion yuan, averaging 3.9 billion yuan per day; operating income is growing across the board, and the total planned dividend amounts to 427.424 billion yuan.

Behind the “double increase” in both operating income and net profit, the banks’ earnings model is quietly changing. As net interest margins continue to narrow, the traditional path of making profits by lending and earning interest is getting narrower and narrower; instead, non-interest income such as bond investment has surged rapidly, becoming a new engine for driving returns. At the same time, financial technology strength has also become a must-have option for measuring banks’ competitiveness.

【Net interest margin】

【The decline in net interest margins narrows continues to face pressure this year**】**

The financial reports show that last year, the six state-owned big banks all achieved positive growth in operating income. Among them, Bank of China’s operating income increased by 4.48% year over year, the fastest growth rate among the six. China Construction Bank and Bank of Communications both saw year-over-year growth in operating income above 2%; meanwhile, Industrial and Commercial Bank of China, Agricultural Bank of China, and Postal Savings Bank of China also recorded year-over-year operating income growth rates of 1.8% or more.

In banks’ operating income, net interest income is still the main event. However, among the six state-owned banks, only Bank of Communications’ net interest income remained in positive year-over-year growth; the other five banks saw year-over-year declines. At the same time, the net interest margins of all six banks continued to narrow year over year.

However, in the view of some senior executives at state-owned banks, the inflection point in banks’ net interest income is already emerging. For example, both ICBC and CCB have seen their net interest margin decline rates narrow.

“Next year’s net interest margins are likely to show an L-shaped trend.” According to the assessment of Yaomingde, vice president of ICBC, if LPR (loan prime rate) and deposit quoted rates are not considered to undergo further large-scale adjustments, it is expected that this year ICBC’s net interest income will turn positive year over year, entering an inflection point, and the rate of net interest margin decline will further converge versus 2025. He believes that in the short term, the downward trend in net interest margins has not changed, but favorable factors that can improve net interest margin performance are continuously accumulating; the marginal stabilization is expected to continue.

Niuliurong, chief financial officer of China Construction Bank, also believes that over the past year, the net interest margin decline rate has shown signals of narrowing at the margin. Combined with statements such as the monetary policy implementation report, the central bank, while paying attention to improving market-based interest rate mechanisms, also focuses on reasonable control of banks’ funding costs—the policy direction is clear. From a micro perspective, the bank has optimized its asset-liability structure by strengthening active funding management and tiered, category-based client pricing management. Therefore, China Construction Bank is confident that the further narrowing of the net interest margin decline rate can be achieved.

Chenggang Liu, vice president of Bank of China, also said that looking ahead to 2026, it is expected that Bank of China’s net interest margin decline rate will narrow significantly year over year, and net interest income will achieve positive growth.

【Investment income】

Investment income grows relatively fast—bond investments draw market attention

Last year, banks’ non-interest income became an important source to offset the decline in interest income. Among non-interest income, some state-owned banks’ investment income also recorded rapid growth.

According to banks’ performance reports, among the six state-owned banks, apart from Bank of Communications, the other five banks saw positive growth in investment income. Among them, China Construction Bank’s investment income surged 129.46% year over year to 49.144 billion yuan, the highest among the six banks; Industrial and Commercial Bank of China rose 54.62% year over year to 63.286 billion yuan, making it the bank with the most investment income among the group.

Zihong Ji, vice president of China Construction Bank, said that last year, the bank increased its allocation to financial investments such as bonds, strengthening the resilience of the group’s asset-liability balance sheet. Its business development is first reflected in closely aligning with changes in the social financing structure, proactively adapting to a new development landscape in the bond market, and stepping up its allocation to bond assets.

It is reported that the bond portfolio held by China Construction Bank has already exceeded 12 trillion yuan, making it a large scale. To effectively enhance value contribution, CCB’s investment strategy is more proactive and flexible: it actively seizes market opportunities, increases the力度 of bond sales at relatively low interest rate levels, and turns over a considerable amount of existing inventory.

As for why ICBC’s investment income increased mainly, it is because realized gains increased from its bond and equity-type investments. Yaomingde noted that last year, the bank’s large-asset allocation paid more attention to long-term reserves.

Looking ahead, Yi Zhang, president of China Construction Bank, said that uncertainties in the market remain the main challenges facing the bank’s investment business. China Construction Bank will adhere to the operating principle of “safe and sound, value investing,” and make preparations in bond varieties, duration, and account strategies, balancing bond investment with its trading business.

【Financial technology】

Building momentum with AI—from “AI Must” to “AI First”

“We launched an ‘Agricultural Bank version of the lobster,’ and this is not chasing trends.” Lin Li, vice president of Agricultural Bank, said at the earnings release conference that the bank uses the tool to automatically process and analyze data, intelligently generate due diligence reports, and make the loan process more convenient, efficient, and secure.

“The Agricultural Bank version of the little lobster” is just a snapshot of banks fully embracing AI technology in recent years. At this year’s earnings release conference, artificial intelligence (AI) became a hot topic. Banks’ plans also upgraded from “AI Must” (must embrace AI) to “AI First” (prioritize developing AI).

Today, the extent to which financial technology is used in bank business has become one of the important indicators for measuring a bank’s competitiveness. All banks have been stepping up efforts to deploy “AI+”-related systems and seize the next development opportunity.

Agricultural Bank stated that it is firmly riding the wave of AI technology development. It has set up a dedicated office for building a smart banking system, strengthening the overall coordination and promotion of smart banking construction. It has also clarified that it will use intelligent agent applications as a lever, with project requirements serving as the driver, to continuously improve its “AI+” capability system and focus on advancing AI’s intelligent and inclusive applications.

Caizhao Cai, vice president of Bank of China, also pointed out that the bank has completed the “grain-level consolidation” project for data, with a cumulative 94,000 data tables connected to the group data lake. At the same time, it has also built the BOCAI large model platform, deployed more than 10 mainstream large models, formed a model matrix, and enabled the entire bank through methods such as APIs, intelligent agents, and application paradigms.

In addition, ICBC said it will follow the trend of technological change, seize the opportunity of “artificial intelligence+,” continuously enhance digital intelligence-driven momentum, and deepen the digital and intelligent transformation of operations management and risk governance. China Construction Bank has advanced the application of AI in a systematic manner; relevant technologies have been scaled to enable 398 scenarios in the group, deeply penetrating key areas such as wealth management, inclusive finance, risk management, and technology R&D.

Beijing News Shell Finance reporter Jiang Fan—Editor Chen Li—Proofreader Mu Xiangtong