Is the mortgage loan release signaling stabilization? At the industry performance meeting: mortgage application submissions have significantly increased since March.

Ask AI · Does the rebound in mortgage application volume signal that the real estate market is stabilizing?

（Photo source: Visual China）

Blue Whale News, March 27 (Reporter Yan Qinyun) “All strategy is aimed at the future; at its core, it is what we do now to win in the future.” On March 27, China Communications Bank (hereinafter “CMB”, stock codes: 601328.SH、3328.HK) held its 2025 performance briefing. When mapping out strategic planning, the bank’s president, Zhang Baojiang, said as much.

According to CMB’s annual report released on the same day, as of the end of 2025, the bank’s total assets were 15.5 trillion yuan, up 4.35% from the end of the previous year. For the full year, operating revenue and net profit were 265.1 billion yuan and 95.6 billion yuan, increasing 2.02% and 2.18% year over year, respectively.

In terms of asset quality, CMB’s non-performing loan ratio was 1.28%, down 0.03 percentage points from the end of the previous year; its allowance coverage ratio was 208.38%, up 6.44 percentage points from the end of the previous year.

At the performance briefing, Zhang Baojiang said that in the second half of 2025, CMB would distribute 2025 dividends to all shareholders. The total dividend amount would account for 32.3% of ordinary shareholders’ net profit. To date, the bank’s payout ratio has remained above 30% for 14 consecutive years. According to CMB’s profit distribution plan, together with the already distributed 2025 interim dividends, the bank would distribute a total of 155k yuan in cash dividends.

“Serving the ‘five major articles’ and strengthening the advantages of Shanghai as our home base”… At the briefing, CMB management clearly laid out future development directions while summarizing the achievements of the past year. At the same time, in response to pressures such as narrowing net interest margins and retail risk, management also offered answers.

Net interest margin at 1.2% last year; full-year outlook expected to stabilize and improve

In recent years, narrowing net interest margins has been a challenge that commercial banks cannot avoid.

As of the end of 2025, CMB’s net interest margin was 1.20%, down 7 basis points year over year.

In its annual report, CMB said the main reason was a more significant decline in asset-side yields. This was influenced by factors including the LPR cut and intense industry competition under a weaker demand-strong supply environment, leading to a 58 basis-point year-over-year decline in customer loan yields. Meanwhile, the overall downward shift in the market interest rate mid-point drove down securities investment yields by 25 basis points.

“To address the downward pressure on asset yields, the Group has continued to strengthen research and judgment on market interest rate trends, reasonably adjust its business structure, and dynamically optimize pricing strategies, resulting in a year-over-year decrease in funding costs.” CMB said.

The annual report shows that during the reporting period, customer deposit interest expenses were 154.72 billion yuan, down 28.69B yuan year over year, a decline of 13.13%. They accounted for 62.80% of total interest expense. The reduction in customer deposit interest expenses was mainly due to a 38 basis-point year-over-year decline in the average cost rate of customer deposits.

Regarding the performance of the net interest margin, Zhou Wanfu, vice president of Bank of Communications, said at the performance briefing that since last year, through efforts in multiple areas, CMB’s net interest margin has achieved basic stability. Looking at the situation in the new year, loan interest rates still face downward pressure. But at the same time, re-pricing on the liabilities side will bring some new positives.

Zhou further explained that in the first quarter of this year, CMB’s loan interest rate declined by about 15 basis points compared with the same period last year, staying basically in line with last year’s fourth quarter. Deposit pricing also fell noticeably compared with the same period last year, while newly originated interest rates were basically flat with last year’s fourth quarter. The decline in deposit-side interest costs will make a significant contribution to the stability of the net interest margin in the near term.

“CMB’s deposit re-pricing speed is slower than that of loans, so net interest margin decreased faster in the past two years. However, as the deposit posted rates decline, a large amount of fixed-term deposits will mature over the next two years; after re-pricing, the interest expense cost will drop significantly.” Zhou said. “From Bank of Communications’ situation, this year the amount of fixed-term deposits maturing is up clearly compared with last year, with a larger portion concentrated in the first quarter. Therefore, looking at the full year, the net interest margin can maintain a trend of stabilizing and improving.”

First-quarter mortgage scale declined year over year; application volume rose after March

It appears that year over year growth in corporate loan scale is faster than in retail loans has become a common phenomenon in the annual reports of listed banks. CMB is no exception.

Data show that in 2025, CMB’s balance of corporate loans was 6,043.81 billion yuan, up 23.39B yuan from the end of the previous year, an increase of 8.57%. Its balance of personal loans was 2,835.038 billion yuan, up 477.23B yuan from the end of the previous year, an increase of 3.00%.

And this year, “corporate growth faster than retail” continues as well. At the performance briefing, Zhou Wanfu mentioned that based on the current loan growth situation, as of now CMB’s overall loan growth volume is roughly the same as last year, but in terms of structure it shows that corporate loans have increased more year over year, while retail loans have increased less year over year.

According to Zhou Wanfu, the above is mainly influenced by two factors. First is personal mortgage loans: last year’s first quarter saw a small spring rebound in real estate, so mortgage loans grew year over year. This year’s first quarter, however, real estate is still in deep adjustment; therefore, CMB’s mortgage repayment volume is larger than its disbursement volume, resulting in negative growth.

Second is auto loans. Since last year, the industry has regulated competition order and tightened controls, which led to the stopping of “high-interest, high-rebate” businesses. This has had a clear impact on auto-loan growth across banks including CMB.

Bank housing mortgage loan data are one perspective for observing the real estate market. The data show that in 2025, CMB’s personal housing loans decreased by 82.63B yuan compared with the end of the previous year, a decline of 1.65%.

Zhou Wanfu said that judging from the growth in mortgage loans, since entering March, the volume of mortgage applications and approvals has risen noticeably.

“Whether compared with last year’s first two quarters or compared with the third and fourth quarters, it has risen by around 15%. This should be a signal that the real estate market is stabilizing. We believe that if things go on like this, mortgage loans can get out of negative growth in this year and gradually achieve positive growth, thereby helping the entire retail-loan business achieve its expected growth target.” Zhou Wanfu said.

Regarding corporate loans, Yin Jiuyong, vice president of CMB, said that CMB expects to maintain a plan of growing more year over year than in 2025.

At the same time, Yin Jiuyong disclosed that from the beginning of the year through the end of February, compared with the 10.9% increase in the same period, CMB’s actual corporate loan deployment continued the trend of growing more year over year.

“From the demand side, we observe that in the first quarter overall corporate credit demand was good, and we expect the overall trend to remain steady growth.” Yin Jiuyong pointed out. “This business is also related to the headquarters’ advance arrangements to have all operating units implement the requirements for high-quality development of financial services to the real economy, and to fully push for expanding project reserves, as well as the joint efforts across the whole bank.”

Retail asset-quality management faces some pressure

Compared with corporate business, in recent years many banks have emphasized retail business, which is now facing challenges. The rise in retail risk in commercial banks has been a key focus for market attention since last year.

From CMB’s situation, in 2025 the bank’s personal loan non-performing ratio also increased: from 1.08% at the end of 2024 to 1.58%. Among them, the non-performing ratios for housing loans, credit cards, personal business loans, personal consumption loans, and other loans were 1.01%, 2.68%, 1.94%, and 1.77%, respectively, all higher than at the end of 2024.

At the performance briefing, CMB vice president Gu Bin candidly said that currently, the portion with relatively more pressure is on retail credit, and also on small business credit; risk control still needs further effort. “Combined with the overall trend in asset quality since 2025, especially since the second half of last year, we feel that asset-quality management and control this year still faces some pressure.”

Gu mentioned three key focuses: first, affected by factors such as individuals’ repayment capacity and a decline in market demand, the asset quality of retail credit and small business credit is expected to remain under pressure this year; second, the real estate market is currently in a stage of bottoming out and stabilizing; third, in some industries there is currently homogeneous competition, which leads to a narrowing of companies’ profit margins and an acceleration of operational differentiation. CMB will continue to pay attention to the operating conditions of companies in these industries and changes in subsequent risks.

As for the asset quality of CMB’s retail credit, Gu Bin believes that besides macro-level external factors such as the downturn in the real estate market, there are also internal structural reasons, such as business loans concentrating into maturity periods. In combination with factors such as the fact that the repayment capacity of customers supported through pandemic relief measures has not yet fully recovered, these jointly affected asset quality.

According to the introduction, faced with the pressure of falling asset quality in retail credit, CMB last year worked hard to increase the deployment of low-risk businesses such as housing loans, strengthening deployment with a focus on key regions and high-quality channels; for operating loans, it focused on scenarios such as business loan circles and chains. At the same time, it strengthened the prevention and control of fraud risks in retail credit. In addition, it promoted debt relief and loan extensions, strengthened coordination between the head office and branches, and together worked to increase collections and intensify asset-quality resolution.

“Last year, the newly originated non-performing loan ratio for consumption loans at Bank of Communications had already declined compared with the previous year, but housing loans and operating loans are still in the process of stabilizing.” Gu Bin said.