Question: How has AI retail business achieved nearly tenfold growth in net profit?

Produced by | Bullet Finance

Author | Huanhuan

Editor | Lightning

Graphic Designer | Qianqian

Reviewer | Songwen

The past year has been tough for the banking industry.

From state-owned giants to joint-stock banks, a common trend is: slowing development pace and continuous compression of profit margins. The “three lows” environment—low interest rates, low interest spreads, and low fee rates—is reshaping the entire industry’s operating logic.

Behind this are profit pressures from narrowing net interest margins, asset quality tests due to retail risk exposures, and growth dilemmas caused by insufficient effective credit demand.

As the annual reports of major listed banks are released one after another, an undeniable fact is clear: those who can maintain their fundamentals in the “three lows” era will be able to accumulate strength for the next cycle.

Against this industry backdrop, Ping An Bank has delivered a meaningful report card. It did not shy away from challenges nor rush for quick gains, but proactively adjusted its structure and solidified its foundation in “deep water.” This annual report provides a sample of how a mid-sized joint-stock bank seeks balance amid adversity.

1. The “Difficulties” and “Changes” of Last Year: From Scale Expansion to Quality Restoration

By the end of 2025, Ping An Bank’s total assets reached 5.93 trillion yuan, a steady 2.7% increase from the end of the previous year. The full-year operating income was 131.442 billion yuan, down 10.4% year-on-year; net profit was 42.633 billion yuan, down 4.2%.

Its operating performance has not yet returned to positive growth, which external observers attribute to the combined effects of market interest rate changes and business structure adjustments. After all, in the “three lows” environment, banks generally face revenue pressure and profit slowdown.

In 2025, Ping An Bank’s operating and management expenses decreased by 5.9% to 38.196 billion yuan, demonstrating effective cost control, which somewhat offset the downward pressure on income.

However, amid overall revenue decline, the 4.2% drop in net profit was less than the 10.4% decline in revenue, indirectly confirming Ping An Bank’s resilience in cost management and risk offsetting.

On the asset side, Ping An Bank continued its proactive restructuring strategy. Personal loan balances decreased by 2.3% year-on-year, while corporate loans grew by 3.5%. This increase and decrease were not passive scale contractions but deliberate asset allocation optimizations: reducing high-risk retail assets and channeling credit resources toward key areas of the real economy.

For example, focusing on traditional industry upgrades and emerging industry cultivation, Ping An Bank selected key segments such as public utilities, digital industries, manufacturing, healthcare, energy, and automotive, providing tailored services to create differentiated competitive advantages. By the end of 2025, loans in these key segments increased by 50.146 billion yuan compared to the previous year.

Liabilities performance was the biggest highlight in Ping An Bank’s 2025 financial report. Amid industry trends toward deposit termization and widespread pressure on liability costs, Ping An Bank’s deposit interest payout rate decreased by 42 basis points to 1.65%, while the average daily balance of demand deposits increased by 5.8% to about 1.19 trillion yuan.

This indicates that by strengthening the absorption of low-cost deposits and agilely adjusting the pace of deposit and interbank liability management, Ping An Bank effectively reduced liability costs, building a solid safety cushion for net interest margins. Lower interest costs also significantly narrowed the margin decline: in 2025, net interest margin was 1.78%, only 9 basis points lower than the previous year.

In terms of risk indicators, the non-performing loan (NPL) ratio at the end of 2025 was 1.05%, down 0.01 percentage points from the end of the previous year; the provision coverage ratio was 220.88%, maintaining strong risk buffer capacity. Overall asset quality remained stable, providing a safety net for business transformation.

Overall, Ping An Bank’s 2025 operating performance shows a phased feature of “structural adjustment, cost reduction, and quality stabilization.” Although revenue and profit have not yet returned to positive growth, the proactive reduction of high-risk assets, optimization of liability structure, and strengthened expense control have significantly narrowed profit declines and orderly cleared risks.

This annual report reflects industry-wide pressures but also demonstrates Ping An Bank’s resilience and effectiveness in strategic adjustments amid “deep water.”

2. Bottoming Out Signals: Retail Business “Stopping the Bleeding” and “Rebounding”

In previous years, Ping An Bank’s retail business was known for rapid growth, establishing significant advantages in personal credit and consumer finance.

However, as macroeconomic conditions entered a counter-cyclical adjustment, retail growth gradually slowed. This was a common industry challenge and an inevitable “growing pain” in Ping An Bank’s retail strategic transformation. Bank President Ji Guangheng once admitted that during the counter-cyclical phase, it takes three to five years of perseverance to overcome difficulties.

In the 2025 financial report, market observers see that after more than two years of strategic adjustment, Ping An Bank’s retail business shows positive signals of “improvement in volume, price, and risk,” indicating that the transformation is passing the most difficult “pain period” and gradually entering a “harvesting phase.”

First, net profit has surged significantly, with a clear contribution to overall profits. In 2025, retail contributed 2.683 billion yuan in net profit, nearly ten times the 0.289 billion yuan of the previous year, increasing its share from 0.6% to 6.3%. Although retail revenue is still in adjustment, continuous efforts in “cost reduction and efficiency improvement” and declining risk costs have led to an early bottoming out and rebound in profits.

Second, retail asset quality continues to improve, with a steady increase in high-quality business proportion. By the end of 2025, personal loan non-performing rate dropped from 1.39% to 1.23%, down 0.16 percentage points year-on-year. Looking at specific products, credit card NPLs fell by 0.32 percentage points, consumer loan NPLs by 0.23 percentage points. Previously high-risk business segments are gradually recovering. While retail loans decreased by 2.3% year-on-year, structural optimization became a highlight: mortgage loans increased by 8.9%, and new auto loans reached 72.626 billion yuan, up 13.9%. These asset classes with strong scenarios and collateral bases grew rapidly, continuously optimizing the retail asset mix toward a balance of “volume, price, and risk.”

Meanwhile, wealth management has become a new growth engine, leveraging comprehensive financial advantages to build a differentiated moat. In 2025, Ping An Bank’s wealth management fee income reached 5.061 billion yuan, up 15.8%. Among them, agency income from personal insurance was 1.292 billion yuan, a significant 53.3% increase, benefiting from Ping An Group’s synergy in bancassurance, contributing important non-interest income.

Additionally, the proportion of new wealth clients from integrated finance reached 50.2%, and new client AUM accounted for 49.1%. Relying on Ping An Group’s unique “comprehensive finance + healthcare and elderly care” moat, this is difficult for other banks to replicate.

By the end of 2025, Ping An Bank’s wealth clients numbered 1.4915 million, a 2.4% increase from the previous year, including 105,600 private banking clients, up 9.1%. The report shows that last year, the bank continued to enhance product screening and customization, meeting diverse client asset allocation needs, providing richer choices and more stable experiences.

The sharp rebound in retail net profit, steady asset quality improvement, rapid growth of high-quality business, and wealth management expansion collectively outline a new stage of retail strategy transformation. They also prove that Ping An Bank’s retail business has shifted from the adjustment phase to a recovery path characterized by orderly risk clearing, continuous structural optimization, and profit rebound.

3. The Starting Point of Reshaping in 2026: How to Continue Moving Forward in “Deep Water”

Standing at the “deep water” node, Ping An Bank’s future development path is clear: on the basis of consolidating existing advantages, transforming strategic adjustment results into sustainable growth momentum. This requires not only safeguarding the liability cost moat but also precisely allocating resources to the real economy aligned with national strategies, achieving steady development through service to the broader goals.

For 2026, Ping An Bank should first consolidate its liability cost advantage and strengthen the safety bottom line of interest margins. The reduction in interest payout rate is a core capability to resist margin decline and was the most impressive operational achievement last year.

Going forward, the bank should continue leveraging digital tools to accumulate low-cost settlement funds, optimize deposit maturity structures, and turn liability cost advantages into flexible credit pricing. Early in the year, analysts from CITIC Securities and other firms predicted that net interest margin would stabilize in 2026, with further narrowing of the central bank’s policy rate cuts. Therefore, if liability cost control continues to be effective and net interest margin stabilizes, Ping An Bank’s net interest income could see positive growth in 2026, supporting overall profit recovery.

Additionally, the bank should integrate into national strategies, expanding growth space through service to the real economy. Last year, Ping An Bank actively implemented the “Five Major Articles” of financial support, increasing support for the real economy, and channeling credit resources toward inclusive finance, green finance, and technology enterprises.

For example, in 2025, new inclusive micro and small enterprise loans reached 286.126 billion yuan, up 29.5%; by the end of 2025, the number of technology clients was 31,917, up 21.1%; technology loan balances reached 306.582 billion yuan, up 9.8%; green loans totaled 266.433 billion yuan, up 12.2%; rural revitalization funds allocated were 51.118 billion yuan, with a total of 203.365 billion yuan invested; rural revitalization debit cards issued numbered 39,800, with a total of 296,200 cards issued.

These achievements are not only substantive results of Ping An Bank’s “Five Major Articles” strategy but also demonstrate that during counter-cyclical adjustments, the bank is expanding its structural growth space by serving national strategies, achieving a synergy of social benefits and business development.

From operational trends, it’s evident that Ping An Bank is shifting from “active subtraction” to a strategic transformation of “subtract to add.”

Subtraction involves reducing high-risk assets, optimizing liability structure, and strictly controlling expenses; addition involves precisely allocating the freed resources into green finance, tech finance, inclusive finance, and rural revitalization—areas aligned with national guidance and with long-term value. The parallel implementation of subtraction and addition not only solidifies the foundation but also opens new growth avenues, enabling Ping An Bank to complete the leap from “scale expansion” to “quality restoration” during the industry downturn.

4. Final Words

If 2024 is seen as Ping An Bank’s “bottoming out in deep water,” then 2025 is more like the “reshaping starting point after bottoming out.” Currently, the market is generally optimistic about the overall performance of the banking sector in 2026. Institutions like Founder Securities predict that the sector may experience a “Davis double play” of earnings and valuation resonance.

Against this backdrop, Ping An Bank, as a typical example of having largely completed the reduction of high-risk assets and stabilized retail operations, is entering a period of strategic harvest. The key future question is whether this adjustment can, under the catalysis of macroeconomic stabilization, achieve a substantial leap from “financial repair” to “growth momentum reshaping.”

Image sources: Interface News Gallery; other uncredited images from: Shetu.com, based on VRF protocol.