China Merchants Bank management: Willing to accept the decline in credit card revenue proportion to better control asset quality

Everyday Business News reporter｜Zhao Jingzhi    Everyday Business News editor｜Xu Shaohang

On the morning of March 30, China Merchants Bank (SH600036, share price 39.48 yuan, total market cap 995.68 billion yuan) held its 2025 full-year results briefing. Attending the meeting were Chairman Mi Jianmin, President Wang Liang, Vice Presidents Peng Jiwen and Xu Mingjie, and Chief Information Officer Zhou Tianhong.

The reporter noted that in 2025, the non-performing loans ratio of China Merchants Bank’s retail loans rose by 0.1 percentage points, and in the fourth quarter the net interest margin rebounded against the trend.

At the results briefing, institutions generally paid particular attention to China Merchants Bank’s net interest margin and asset-quality issues.

Retail credit risk is still in an upward phase

The 2025 annual report shows that China Merchants Bank’s non-performing loan ratios for small and micro loans and personal housing loans rose. Among them, the non-performing loan ratio for small and micro loans rose significantly, from 0.79% to 1.22%. The non-performing loan ratio for personal housing loans rose from 0.48% to 0.51%, while the non-performing loan ratio for consumer loans fell from 1.04% to 1.02%.

“For the small and micro segment, our non-performing loans, watch-listed loans, and overdue loans are all increasing. The non-performing ratio for consumer loans has declined to some extent, but the watch rate has risen.” Xu Mingjie, Vice President and Chief Risk Officer of China Merchants Bank, said that in the short term the real estate market is still adjusting, and whether residents’ employment income and growth can improve quickly also creates a certain level of pressure on asset quality such as small and micro loans and consumer loans.

“We have observed that this year the risk in the retail credit market as a whole is still in an upward phase, and credit card asset quality also faces some pressure. We will take proactive measures to control the risk of retail credit, and ensure that the quality of retail credit remains basically controllable.” Xu Mingjie said that going forward, China Merchants Bank will optimize its business structure, adhere to collateral-based lending as the main approach, and improve loan admission standards—especially for consumer-category loans. It will also dynamically adjust the admission standards for small and micro loans, continuously optimize the customer-segment structure, insist on early warning, early detection, early resolution, and early disposal, and adopt a more proactive strategy to reduce the risk of retail credit and improve the quality of retail credit assets.

It is worth noting that, against the backdrop of a decline in the credit card industry’s card issuance volume, China Merchants Bank’s credit cards in circulation and the number of accounts in circulation both rose last year, but its credit card transaction volume, credit card interest income, and non-interest income all declined, including a year-on-year decline in transaction volume of 7.62% to 4.08 trillion yuan.

“Last year credit cards saw negative growth, and balances declined somewhat. But I believe this strategy is to maintain a stable, low-volatility approach: we select customer segments carefully to prevent and control risks. We are willing to accept a decline in the contribution of revenue share, in order to manage asset quality well. That’s why our credit card asset quality has remained relatively stable.” Wang Liang, President of CMB, said.

Hope the net interest margin stabilizes in the second half

Net interest margin is the core metric for measuring a bank’s profitability, representing the net interest income generated per unit of interest-earning assets. In recent years, due to sustained declines in market interest rates, banks’ net interest margins have continued to narrow.

The annual report shows that in 2025 China Merchants Bank’s net interest yield was 1.87%, down 0.11 percentage points year over year, but the net interest margin in the fourth quarter rose sequentially.

Peng Jiwen, Vice President of China Merchants Bank, said that from a quarter-by-quarter perspective of CMB’s net interest margin in 2025, the first three quarters were 1.91%, 1.86%, and 1.83% respectively, and the fourth quarter returned again to 1.86%. There are two main features. First, the net interest margin is still declining, but the rate of decline is narrowing. In the fourth quarter there was indeed a certain rebound—“up by 3 bp (basis points) according to the group reporting basis, and up by 2 bp according to the company reporting basis. This shows that subsidiaries made a contribution.”

Second, CMB has made extensive efforts in its asset-liability structure, including increasing the proportion of assets with higher yields as much as possible, and reducing assets with lower yields such as bills, and arranging asset-combination management.

Regarding whether the net interest margin rebound in the fourth quarter can be sustained, Peng Jiwen said that in 2026 the net interest margin will continue to narrow, but the narrowing magnitude will be better than the previous year. “Mainly due to external factors, such as asset-pricing declines caused by insufficient asset demand. But there is also a technical factor: in May last year we reduced interest rates, and we still had a portion of loans that had not completed repricing. This will be concentrated in the first and second quarters of this year—roughly 78% in the first quarter, with the remainder completed in the second quarter.” Peng Jiwen noted that this will correspondingly have a certain pull on loan yields.

Deposit interest rates subject to repricing will be distributed relatively evenly across this year. However, Peng Jiwen pointed out that CMB’s current deposit proportion is around 50%. Current deposit rates are basically already at their lowest, and fixed-deposit rates are also relatively low, so there is extremely limited room for deposit rate declines.

“In 2026, we hope to achieve several goals. First, to make the narrowing of the net interest margin smaller in magnitude. Second, to achieve net interest margin stabilization as soon as possible—under the condition that no major policy is introduced in the external environment, we will try to stabilize it in the second half. Third, we hope the net interest margin level will still remain market-leading.” Peng Jiwen said.

Cover image source: Economic Daily Media Database