Non-interest income becomes a decisive factor: joint-stock banks in 2025 "Competing for dominance, struggling at the bottom"

◎ Reporter Ma Min

Division and transformation are the keywords for the recent development of joint-stock banks.

Over the past year, in a business environment full of challenges, the “feel” of joint-stock banks has been broadly similar—market share declined, net interest margins faced pressure, and risk concerns still remained. However, under the same set of questions, their operating results differed greatly.

Among nine A-share listed joint-stock banks, only three—China Merchants Bank, Industrial Bank, and Pudong Development Bank—achieved growth in both operating income and net profit. Meanwhile, Ping An Bank, Everbright Bank, Huaxia Bank, and Zheshang Bank saw declines in both operating income and net profit.

“Three Giants in Corporate Banking” race you to the front

In terms of size, China Merchants Bank, Industrial Bank, CITIC Bank, and Pudong Development Bank remain at the top of the joint-stock banks’ tier—each with total assets exceeding 10 trillion yuan. China Merchants Bank, backed by its retail advantage, firmly holds the “number one seat,” while Industrial Bank, CITIC Bank, and Pudong Development Bank’s “three giants in corporate banking” race each other.

By scale, Industrial Bank crossed the 10-trillion-yuan threshold in the fourth quarter of 2024. A year later, in the fourth quarter of 2025, CITIC Bank and Pudong Development Bank also surpassed 10 trillion yuan. By the end of the third quarter of 2025, Pudong Development Bank and CITIC Bank differed by only 5.9 billion yuan in asset scale, but in the fourth quarter, their gap widened to 49.2 billion yuan.

In terms of revenue generation, China Merchants Bank continued to “lead the pack” with operating income of 337.532 billion yuan. In 2025, CITIC Bank and Industrial Bank’s operating income was 212.475 billion yuan and 212.741 billion yuan, respectively—just a 2.66 billion yuan difference. Yet after deducting all expense outlays, Industrial Bank’s net profit attributable to shareholders was higher by 6.851 billion yuan. This shows that cost reduction and efficiency improvement are mandatory choices and have become the profit source that banks cannot avoid “scrutinizing and squeezing.”

In sharp contrast to the competition among the top tier, the bottom-tier joint-stock banks are still struggling in the mire—and each has its own worries.

Due to heavier historical burdens, China Minsheng Bank has increased the力度 of provisioning. Although its operating income rose 4.82% year over year, net profit attributable to shareholders still fell 5.37%.

In addition, Ping An Bank, Everbright Bank, Huaxia Bank, and Zheshang Bank all saw year-over-year declines in both operating income and net profit, and have not yet returned to a benign growth track characterized by simultaneous improvements in scale and efficiency.

Non-interest income has become the deciding factor

In a low interest rate environment, net interest margin—the core profitability indicator—has continued its downward trend. The basic position of banks’ interest income is difficult to stabilize, and the logic of “make up for price with volume” is no longer sustainable. Non-interest income has become the deciding factor.

The broader trend of net interest margin decline has not changed. For example, by the end of 2025, the net interest yield of Everbright Bank and CITIC Bank fell by 14 basis points year over year, with a relatively large decline, mainly driven by the decrease in asset yield.

However, some banks’ net interest margins show signs of stabilizing. By the end of 2025, Pudong Development Bank’s net interest margin was flat compared with the start of 2024; Minsheng Bank’s net interest margin “rose against the trend” by 1 basis point, mainly thanks to cost control on the liability side.

On the non-interest income front, CITIC Bank has achieved positive growth for six consecutive years. At a performance briefing, CITIC Bank Chairman Fang Yingjun introduced that over the past five years, the proportion of the bank’s non-interest income increased by 9.3 percentage points.

Stepping up wealth management business is an effective way to make up for middle-income contributions, and it also tests banks’ level of light-asset operations.

Facing the continued weakness in retail credit demand, China Merchants Bank still holds its retail “moat.” In 2025, its net fee and commission income increased 4.39% year over year, including wealth management fee and commission income up 21.39% year over year. Its net interest margin also remained at a relatively high level for the peer group—1.87%.

Although Ping An Bank has experienced “pain during the transition” in retail transformation, it said it has “started to see the light at the end of the tunnel”: once the transformation progress reaches 70%, the net profit contribution from retail finance hit the bottom and then began to rebound.

However, if non-interest income relies only on investment returns, it is easy to be affected by fluctuations in financial markets. Ping An Bank was impacted accordingly, leading to declines in non-interest net income for businesses such as bond investments.

How to get through the cycle

In terms of asset quality, joint-stock banks overall remain steady.

Over the past year, joint-stock banks generally increased efforts to dispose of non-performing assets. Yet by the end of 2025, the non-performing loan ratios of Industrial Bank, Everbright Bank, and Minsheng Bank were higher than at the end of 2024. In addition, the non-performing loan ratios for individual loans at several joint-stock banks also rose, and the risk pressure in consumer loans and mortgage loans cannot be ignored.

As the “cash reservoir” for adjusting the provisioning coverage ratio, banks often can beautify financial statements through “financial techniques.” It is worth noting that by the end of 2025, Huaxia Bank’s provisioning coverage ratio fell to 143.30%, down 18.59 percentage points from the end of 2024; Zheshang Bank’s provisioning coverage ratio was 155.37%, down 23.30 percentage points from 178.67% at the end of 2024. Both have been hovering near the “warning line” of around 150%.

In recent years, the growth rate of performance for the joint-stock banking sector has slowed, so it could be said to be “surviving in the cracks.” This is because, with state-owned big banks “moving downward” to go after customers and with city commercial banks rising by leveraging local advantages, joint-stock banks are squeezed from both ends, and their market share declines year by year.

Regarding this year’s operating outlook, several joint-stock banks have stated that it is “hardly optimistic” and that “challenges still remain.”

However, based on publicly available information from recent earnings conferences, joint-stock banks’ strategic playbooks have also taken on new ideas: China Merchants Bank focuses on “retail, starting anew,” Ping An Bank vows to “return to growth,” and Industrial Bank steps toward a “value bank” approach… Joint-stock banks are generally beginning to think about what “the ability to get through the cycle” means, and what impact it will have on their operations next. Let’s wait and see.

(Editor: Qian Xiaorui)

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