Net profit has declined for two consecutive years, and it has faced heavy regulatory penalties. Minsheng Bank's "thirty and standing" urgently needs a breakthrough.

On March 30th, Minsheng Bank (600016.SH, 01988.HK) disclosed its 2025 annual report, which coincides with the bank’s 30th anniversary. This performance report did not deliver the eye-catching results the market expected. Overall, the company’s performance shows a trend of “revenue turning positive, profits continuing to decline.”

As China’s first nationwide joint-stock commercial bank mainly initiated by private enterprises, Minsheng Bank once relied on its market-oriented mechanism advantages to carve out a differentiated path in small and microfinance and wealth management. But now, facing multiple challenges such as stricter regulation and intensified industry competition, this “thirty-year-old” joint-stock bank stands at the starting point of the next phase, seeking a balance between stabilizing scale, adjusting structure, and controlling risks.

Financial data presents a mixed picture, with non-interest income “saving the scene”

The company’s financial report shows that in 2025, Minsheng Bank achieved operating income of 142.87B yuan, up 4.82% year-on-year; net profit attributable to the bank’s shareholders was 30.56B yuan, down 5.37% year-on-year; after deducting non-recurring gains and losses, net profit was 30.93B yuan, down 4.19%. Among these, the biggest highlight of Minsheng Bank’s performance is the positive growth in revenue, reversing the previous continuous decline.

Image source: Minsheng Bank 2025 Annual Performance Report

Looking at the revenue structure, Minsheng Bank’s income sources show a characteristic of “interest net income as the base, non-interest net income driving growth.” In 2025, the bank’s net interest income was 100.13B yuan, up 1.46% year-on-year, accounting for 70.08% of operating income, remaining the core pillar of revenue; the positive growth in net interest income benefited from the stabilization of net interest margin—2025’s net interest margin was 1.40%, an increase of 1 basis point (BP) compared to 2024. Against the backdrop of most commercial banks experiencing continued narrowing of net interest margins, this performance is considered “counter-cyclically stable.”

Meanwhile, non-interest net income reached 42.74B yuan, up 13.67% year-on-year, accounting for 29.92% of operating income, with a growth rate significantly higher than interest net income, becoming an important driver of revenue growth. The bank’s fee and commission net income was 19.24B yuan, up 4.99%.

Among these, investment income, gains from fair value changes, and exchange gains combined grew by 43.51% year-on-year, becoming the core force behind the growth of non-interest income. Especially notable is the income generated from the termination of financial assets measured at amortized cost, reaching 6.55B yuan, about 3.5 times that of 2024, demonstrating the bank’s flexible operation capabilities in bond investments.

Image source: Minsheng Bank 2025 Annual Performance Report

Li Bin, Vice President and Secretary of the Board of Minsheng Bank, explained at the earnings conference that the stabilization of net interest margin mainly benefited from three measures: first, optimizing deposit structure, with the interest paid on deposits decreasing by 40 basis points to 1.74% for the year; second, refined management of interbank funding costs; third, continuous adjustment of asset structure, with general loans accounting for 55% of total assets, an increase of 0.9 percentage points year-on-year. However, the “stability” of this margin still requires observation.

Nevertheless, the 1.40% net interest margin remains below the average level of commercial banks (which was 1.42% in 2025).

Net profit continues to decline, non-performing loan ratio slightly rises

Compared to the rebound in revenue, Minsheng Bank’s profit performance appears more weak. In 2025, the net profit attributable to the parent was 30.56B yuan, down 5.37% year-on-year. Although the decline narrowed from 9.85% in 2024, it marked the second consecutive year of negative growth. From 2023 to 2025, the bank’s net profit attributable to the parent decreased from 35.82B yuan to 30.56B yuan, a cumulative decline of about 14.7% over three years.

Notably, the sharp increase in credit impairment losses has become the main factor eroding net profits. In 2025, credit impairment losses were 53.95 billion yuan, up 18.64% year-on-year, far exceeding the growth of operating income and net interest income. The increase in impairment losses is mainly due to the bank intensifying asset disposal efforts and, influenced by macroeconomic conditions, some industry sectors exposing credit risks, leading to increased provisions.

Image source: Minsheng Bank 2025 Annual Performance Report

Additionally, in 2025, Minsheng Bank’s business and management expenses totaled 51.01B yuan, with a cost-to-income ratio of 35.70%. Although this is lower than 37.65% in 2024, it remains relatively high within the industry.

As a high-risk industry, risk management capability is a key component of a bank’s core competitiveness. In 2025, Minsheng Bank adhered to the philosophy that “compliance operation is the core competitiveness,” continuously optimized its risk control and compliance management system, promoted the “Loan Post-Management Improvement Year” campaign, increased efforts in recovering and disposing of non-performing assets, and maintained overall asset quality stability. However, risk indicators still faced pressure.

The financial report shows that at the end of 2025, the non-performing loan (NPL) ratio was 1.49%, up 0.02 percentage points from 1.47% at the end of 2024; at the same time, the provision coverage ratio was 142.04%, slightly higher than 141.94% at the end of 2024. While within the regulatory requirement range of 120%-150%, it is significantly below the industry average (which was 205.21% at the end of 2025).

Image source: Minsheng Bank 2025 Annual Performance Report

Segmentally, asset quality shows a “corporate improvement, retail under pressure” divergence. In 2025, the total profit from corporate business was 28.61B yuan, accounting for 88.7% of the bank’s total profit. Industry-wise, non-performing loans in the real estate sector improved. By the end of 2025, non-performing loan balance in corporate real estate was 11.74B yuan, a decrease of 4.96B yuan from the previous year; the non-performing loan ratio was 3.61%, down 1.40 percentage points from the previous year.

Meanwhile, pressure on retail business is evident. The report shows that by the end of 2025, retail business profit was 11.78B yuan, but the non-performing loan ratio in retail loans increased. During the same period, total non-performing personal loans reached 32.15B yuan, an increase of 330 million yuan from the previous year; the non-performing loan ratio was 1.92%, up 0.12 percentage points.

Given the continuous decline in the provision coverage ratio and the significant increase in credit impairment losses, potential non-performing pressures have not been fully released. Moreover, with the “non-performing ratio exceeding net interest margin,” asset quality management still faces challenges.

Technology, green finance, and inclusive finance develop in coordination

Compliance control still has gaps

In 2025, Minsheng Bank focused on technological finance, green finance, and inclusive finance as strategic priorities, increasing investment to build differentiated competitive advantages.

In technological finance, the bank upgraded its “1+18+N” architecture, relying on 18 key branches and 80 specialized or dedicated branches for tech finance, achieving full coverage of tech innovation hubs; enriched the “Yichuang” product service system, deepened cross-border and supply chain scenario services. By the end of 2025, the bank served 126.2k tech-based enterprises, 29.7k “specialized and innovative” clients, with a tech enterprise loan balance of 126.2k yuan, up 9.66% year-on-year, and received multiple awards related to tech finance.

In green finance, the bank issued 10 billion yuan of green bonds, focusing on green, low-carbon, and circular economy sectors, enriching and iterating the “Minsheng Fenghe” product system, and implementing innovative businesses like industry transformation-linked carbon footprint loans. By the end of 2025, green loan balances reached 29.7k yuan, up 20.29% year-on-year, outpacing the growth rate of all loans. The MSCI ESG rating continued to maintain the top “AAA” level globally, making green finance a key pillar of the bank’s sustainable development.

In inclusive finance, the bank built a comprehensive service system covering settlement, financing, and digital management tools, launching small and micro enterprise products like “Order Loan” and “Payroll Loan,” optimizing resource allocation for small and micro credit plans. By the end of 2025, the number of small and micro loan customers increased by 23.01% from the previous year; inclusive small micro enterprise loans reached 452B yuan, up 2.25%; inclusive corporate loans totaled 358.23B yuan, up 28.05%. The coverage and quality of inclusive financial services continued to improve.

However, it is important to note that in 2025, Minsheng Bank’s head office and some branches received multiple penalties for violations, with fines totaling over 60 million yuan, and several responsible persons received warnings or fines.

According to the administrative penalty decision issued by the Yuncheng Regulatory Bureau of the China Banking and Insurance Regulatory Commission on December 29, 2025, Minsheng Bank Yuncheng Branch was fined 500k yuan for misclassification of credit asset risks and inadequate post-loan management, with then Vice President Gao Yongming given a warning, and then Assistant President Cheng Zhiyuan given a warning and fined 60k yuan.

In December 2025, the Ningbo Regulatory Bureau of the China Banking and Insurance Regulatory Commission issued penalties for violations including lax management of loans and investments, inadequate asset impairment provisions, and non-compliance in data reporting, with fines totaling 2.2 million yuan and warnings to responsible persons; in October of the same year, violations related to loans, bills, interbank business management, and data reporting resulted in fines of 58.65 million yuan; six responsible persons received warnings and fines totaling 360k yuan.

Currently, China’s banking industry is at a critical stage of high-quality development transformation. Factors such as deepening interest rate marketization, financial technology empowerment, stricter regulation, and fierce industry competition impose higher requirements on commercial bank management. As China’s first nationwide joint-stock commercial bank mainly initiated by private enterprises, Minsheng Bank faces industry-wide challenges but also has unique opportunities for differentiation. (Produced by “Wealth Weekly - Financial Affairs”)

Disclaimer: The opinions expressed in this article do not constitute any investment advice. Investors operate at their own risk.