First positive revenue in three years: Recruitment industry performance conference directly addresses retail pressure, deconstructing the "new approach"

(Source: China Vision)

China Merchants Bank March 30 News (Reporter Yan Qinyun) After two consecutive years of revenue decline, China Merchants Bank (hereinafter referred to as “CMB,” stock codes: 600036.SH, 03968.HK) has returned to positive growth.

In the past year, CMB achieved operating income of RMB 337.532 billion, an increase of 0.01% year over year.

While revenue has turned positive, CMB reported net profit attributable to shareholders of RMB 150.181 billion, up 1.21% year over year. Total assets at the end of the period exceeded RMB 13 trillion, an increase of 7.56%.

“(Revenue) declined for two years, and finally achieved positive growth. This is a marginal increase, but it is also hard-won,” said Wang Liang, President of CMB, at the 2025 annual performance briefing held on March 30.

In recent years, changes in the external environment have impacted the retail business of commercial banks. At the performance briefing, China Merchants Bank—known as the “King of Retail”—faced more scrutiny regarding this sector.

Whether it is the downward trend in asset-side earnings, the impact of fee reduction policies on agency distribution, or risks in retail credit, all introduce uncertainties for future operations and will influence overall performance.

“For CMB, how to adjust the business structure and income structure to maintain sustainable development requires new ideas,” Wang Liang emphasized.

During the more than two-hour discussion, the management directly addressed the “pressure” and provided CMB’s strategic direction for the next stage.

Net interest margin to remain stable with slight decline; retail risks in an upward phase

As Wang Liang stated, CMB’s return to positive growth in 2025 was “not easy.” The annual report shows that last year, CMB’s net interest margin was 1.87%, down 11 basis points (BP) from the previous year.

Wang Liang believes that this year, the net interest margin will continue to stabilize with a slight decline, but the decline will be narrower than in 2025. He mentioned several factors affecting the margin: first, the People’s Bank of China (PBOC) will likely further cut interest rates and reserve requirement ratios, which could impact loan yields.

Second, overall credit demand remains insufficient, and disorderly competition among banks persists, with many still “competing for volume through price cuts.” The downward trend in asset-side earnings has not changed, which could significantly negatively impact the net interest margin. On the liability side, because CMB’s overall cost of liabilities decreased by 38 BP last year, its liability costs are already relatively low, making further large reductions difficult.

CMB Vice President, Chief Financial Officer, and Secretary to the Board Peng Jiewen further added that, after the LPR was lowered in May last year, some interest-bearing loans had not yet been repriced. Most of these will be completed in the first quarter of this year, which will exert downward pressure on loan yields.

Additionally, Wang Liang noted that growth in non-interest income is also under some pressure. “Last year, our wealth management—especially retail wealth management—grew rapidly, compensating for the slowdown in other comprehensive income. However, this year, further fee-cutting policies are expected, particularly in the third phase of public fund distribution, which may impact business performance.”

It is also noteworthy that retail credit risks are becoming a common industry challenge, and CMB is no exception. Last year, the non-performing loan (NPL) ratio decreased from 1.07% to 0.94%. Specifically, for retail loans, the NPL ratio was 1.06%, up 0.1 percentage points from the previous year.

CMB Vice President and Chief Risk Officer Xu Mingjie shared his observations at the briefing: since 2019, credit card risks have been rising first. In 2022, risks related to corporate real estate exploded and continued to increase. In 2024, risks in housing mortgages, consumer loans, and micro and small enterprise (MSE) loans began to rise, though the growth rate has started to slow recently.

Xu Mingjie pointed out that under low-interest-rate conditions, products that previously had good profitability are seeing declining earnings, which reduces their risk tolerance. Therefore, CMB needs to optimize its business structure, focus on collateral-based lending, and improve entry standards—especially for consumer and micro loans. It should also dynamically adjust customer segments, continuously optimize the customer mix, and implement early warning, early exposure, early resolution, and early disposal strategies. A more proactive approach is necessary to reduce retail credit risks and improve credit quality.

The annual report shows that last year, CMB’s provision coverage ratio was 391.79%, down 20.19 percentage points from the end of the previous year. Xu Mingjie explained that this decline was mainly due to an increase in the balance of non-performing loans. Only when the NPL balance decreases can the provision coverage ratio improve.

Xu Mingjie further emphasized that retail credit risks across the entire market remain in an upward phase, and credit card assets also face certain pressures. “However, we must take proactive measures to control retail credit risks and ensure that retail credit quality remains basically manageable.”

Retail starts again; wealth management is a key breakthrough

Since implementing its retail banking strategy in 2004, CMB has continuously evolved. Wang Liang explained that after more than 20 years of effort, the bank has established systematic advantages. The contribution of retail banking to CMB’s revenue and net profit exceeds 50%.

However, Wang Liang admitted that in recent years, the rapid decline in retail credit growth and market changes have affected the retail credit card segment’s contribution. In wealth management, due to ongoing fee reductions in fund and insurance distribution, a previously important revenue segment has become a growth gap.

By the end of 2025, CMB’s retail loan balance reached RMB 37.20191 trillion, a 2.07% increase from the previous year’s end, with retail loans accounting for 51.26%. Both the growth rate and proportion have declined compared to the previous year.

Wang Liang believes that for CMB, adjusting the business and income structures to sustain development requires new ideas.

CMB’s strategy involves the “Four Major Segments” (note: retail finance, corporate finance, investment banking and financial markets, wealth and asset management) with balanced development. By further consolidating the systemic advantages of retail finance and maintaining its role as a stabilizer for contribution, the bank aims to accelerate building distinctive competitive advantages in corporate banking. Investment banking and financial markets are also emerging as new growth drivers, with asset management and wealth management showing positive trends. The four segments work synergistically to support each other.

Wang Liang also emphasized that CMB must accelerate the “Four Transformations” (internationalization, comprehensive operations, differentiation, and digital intelligence). He particularly highlighted “international development.” In terms of comprehensive operations, leveraging multiple licenses to strengthen, refine, and expand subsidiaries so they can become leading institutions in their respective niche markets is key.

Furthermore, CMB is implementing a regional development strategy. “In the past, our main profit contributors were Beijing, Shanghai, and Shenzhen. Recently, we are shifting from these three core cities to three core regions. If these become new growth engines, CMB’s development will be more sustainable,” Wang Liang said.

“Retail starts again; corporate surpasses.” At the briefing, CMB Chairman Miao Jianmin clarified the development direction, focusing on “retail starts again” as “asset quality improvement, liability consolidation, and taking wealth management to a new level.” He added, “The future major breakthrough in retail will be wealth management.”

By the end of 2025, CMB’s retail customer base reached 224 million (including debit and credit card customers), a 6.67% increase from the previous year. Among them, Gold Peony and above customers (retail clients with average daily total assets of RMB 500,000 or more) numbered 5.9315 million, up 13.29%. Total retail assets under management (AUM) reached RMB 170.82519 trillion, an increase of 14.44%.

Banking industry divergence: operational strength and technological innovation

At the results briefing, besides retail development, AI was another key focus.

“CMB has always regarded technological innovation as a fundamental strategy,” said Zhou Tianhong, Chief Information Officer of CMB. In 2023, Chairman Miao Jianmin proactively proposed building the industry’s first intelligent bank. CMB has made positive explorations and accumulated valuable experience.

In 2025, CMB launched the AI First strategy, requiring the comprehensive promotion of large model applications across the bank. To implement this, CMB has made detailed organizational arrangements for advancing large model deployment.

Zhou Tianhong explained that, based on technical features, CMB conducted a comprehensive review of all staff, identifying 1,588 work tasks that could be relatively independently performed by employees where large models could be applied. Each task was analyzed for the potential contribution of large models and categorized into three levels for prioritized investment. By the end of last year, 69% of high-value tasks had been implemented, while 39% of low-value tasks had been addressed, totaling 856 tasks.

He also noted that developing large models differs significantly from traditional software development. Large models are probabilistic applications with high uncertainty, requiring ongoing tuning and iteration. CMB’s experience indicates that about six iterations are needed before deployment.

According to Zhou Tianhong, CMB’s large model engineering system has made significant progress, reducing the average iteration cycle from 32 days in 2024 to 8 days, a 75% reduction, facilitating rapid deployment.

Token is the “atom” of the AI era. The annual report shows that CMB’s daily large model token throughput in 2025 increased by 10.1 times compared to 2024.

It is important to note that building an intelligent bank involves substantial investment. During the reporting period, CMB’s information technology expenditure was RMB 12.901 billion, accounting for 4.31% of operating income. The bank employed 11,051 R&D personnel, representing 9.09% of its total staff.

Market attention is on the question: how much will this investment impact output?

Miao Jianmin believes that CMB’s investment in building an intelligent bank is aimed at optimizing resource allocation. “Because we differ from other companies—others might suddenly increase large capital expenditures, which could impact profitability that year. We make substantial investments every year, and we are not starting from zero. From an input-output perspective, the impact is limited.”

He further stated that future industry divergence will occur in two areas: operations and technology. In operations, CMB has already established strong core competitiveness. Next, we will build a technological moat, ensuring CMB maintains long-term core competitiveness amid industry competition and downturns.