Agricultural Bank of China Linli: Risk management capabilities will become a dividing line for commercial banks in the next two to three years

Ask AI · In an era of technological homogenization, how can bank risk control become the deciding factor in competition?

At the Agricultural Bank of China’s 2025 annual results briefing held today, Vice President Lin Li of Agricultural Bank of China provided a detailed explanation of the bank’s risk management across the whole bank and its asset quality situation.

Lin Li said that, from the perspective of commercial banks, the watershed in competition among the banking industry over the next 2 to 3 years will lie in the capability of risk management. He noted that products can become homogenized, services can become homogenized, and even the AI technologies currently drawing widespread attention will eventually follow the same path toward homogenization, but the differentiation in risk management is objectively present across different banks. Therefore, it is crucial to do a good job in risk management.

Regarding the work that ABC has done in credit risk control, Lin Li said that, around “controlling new increases, building existing scale, and strengthening the foundation,” the bank has delivered five notable initiatives: first, highlight prudent and steady operations, adhering to the philosophy of “careful sailing ensures safe passage for ten thousand years”; second, highlight a system-wide perspective; third, highlight development quality and efficiency; fourth, highlight a problem-oriented approach; and fifth, highlight bottom-line thinking.

For specific risk indicators, Lin Li said that in 2025, ABC’s non-performing loan ratio across the whole bank was 1.27%, down 0.03 percentage points from the end of last year, and it has shown a declining trend for five consecutive years. Meanwhile, the watchlist ratio was 1.39%, down 0.01 percentage points from the beginning of the year; the delinquency rate was 1.25%, remaining the lowest among comparable peers, and it is the only bank with a delinquency rate lower than its non-performing loan ratio. ABC has maintained a negative spread between delinquency and non-performing loans for five consecutive years. In addition, Lin Li emphasized that, out of prudence, last year ABC adjusted its credit loss provisions by 39.6 billion yuan; the current provision coverage ratio is 292.55%, keeping the provision level at the highest among comparable peers, thereby maintaining strong risk coverage capacity.

In terms of non-performing loan formation, Lin Li introduced that, currently, the non-performing loan formation rate for corporate loans is lower than last year, while the non-performing loan formation rate for inclusive retail loans is higher than last year. ABC’s non-performing loan formation rate for the whole bank was 0.89%, basically in line with last year, and remained within a relatively good level. He particularly pointed out that ABC’s non-performing loan formation rate has been kept below 1% for three consecutive years.

Regarding the inclusive finance and retail business data that market participants are关注 about, Lin Li said that, currently, ABC’s balance of loans to inclusive-type small and micro enterprises reached 3.93 trillion yuan, up 700.7 billion yuan from the beginning of the year, with a non-performing rate of 1.54%. The balance of ABC’s retail loans, including loans to farmers and credit cards, reached 9.26 trillion yuan, up 448.5 billion yuan from the beginning of the year, with a non-performing rate of 1.34%. Lin Li said that ABC’s key indicators for inclusive retail loans have remained at a leading level among peers.

Finally, Lin Li said that, in response to this new proposition for ABC—inclusive and retail credit—ABC has made full efforts to build new rules for inclusive and retail credit management, comprehensively shape an inclusive and retail credit risk prevention and control system, and further strengthen the risk control foundation by focusing on six key areas.