Annual report disclosure signals a halt in net interest margin decline; the banking sector rebounds against the trend with active trading. Bank of China and Agricultural Bank both rise over 3%.

(Source: Caiwen)

          In 2026, the net interest margin of listed banks is expected to narrow slightly by 4 basis points, with the pressure concentrated in the first half; Ping An Securities believes that reducing costs on the liability side is the key factor for the stabilization and rebound of the net interest margin, and that this year banks’ financial performance will be better than in 2025.            

On March 31, the banking sector was active against the trend during intraday trading. Bank of China (601988.SH) and Agricultural Bank of China (601288.SH) rose by more than 3%, while Huaxia Bank (600015.SH), Shanghai Pudong Development Bank (600000.SH), Postal Savings Bank of China (601658.SH), China Construction Bank (601939.SH), and CITIC Bank (601998.SH) led the gains.

In terms of news, as of March 30, the 2025 “report cards” of ICBC, Agricultural Bank of China, Bank of China, CCB, Bank of Communications, and Postal Savings Bank were released. During the reporting period, the six major banks all achieved “double growth” in revenue and net profit, totaling net earnings of about 1.42 trillion yuan, and core operating indicators of multiple banks improved quarter by quarter. The net interest margin indicator of banks has released a positive signal of “stabilization after a decline.” Data show that among 13 A-share listed banks that have disclosed their 2025 annual reports, after excluding 2 banks that have not disclosed 2025 third-quarter data, 6 banks saw their net interest margin at the end of last year’s fourth quarter remain flat or rise quarter-over-quarter compared with the previous quarter, accounting for nearly half of the total, breaking the trend of banks’ net interest margins continuing to decline one-way in recent years.

Industry insiders analyze that in the short term, the trend of falling net interest margins has not changed, but favorable factors driving improvement are continuing to accumulate.

Kaiyuan Securities expects that in 2026 the net interest margin of listed banks will narrow slightly by 4 basis points, with the pressure concentrated in the first half; Ping An Securities believes that reducing costs on the liability side is the key factor for the stabilization and rebound of the net interest margin, and that this year banks’ financial performance will be better than in 2025.

Guotai Haitong Securities released a research report stating that it expects sample banks’ 26Q1 revenue growth and net profit attributable to shareholders growth to be 2.7% and 2.2%, respectively. Revenue growth is expected to show an upward repair trend, while profit growth is expected to remain steady, mainly due to a clear narrowing in the year-over-year decline in net interest margins and alleviation of pressure from other non-interest baselines. The firm noted that in 2026, the investment focus for the banking sector should capture three main themes: 1) finding targets whose performance growth is expected to improve or maintain high-speed growth; 2) paying attention to banks with expectations for conversion of convertible bonds; 3) the dividend strategy is still expected to continue.

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