Everbright Bank's annual report caused a mix-up, but the more troublesome issues came afterward...

Ask AI · How will the narrowing of the net interest margin affect the profit foundation of China Everbright Bank?

China Everbright Bank’s amazing move once again makes people realize that the world is just one huge makeshift crew.

Recently, China Everbright Bank released its 2025 performance report. As soon as you compare the A-share financial report with the H-share financial report, many figures don’t match—like data compiled after drinking fake alcohol.

For example, the asset size of its Shanghai branch is listed as 443.1 billion yuan on the A-share report, but only 39.5 billion yuan on the H-share report—one-tenth, a difference of tenfold. The data for the Shenzhen branch ended up under the head of the Shijiazhuang branch. Also, the data for several other branches were mixed up.

These data mix-ups left many investors completely baffled. Someone joked: “The financial report probably used AI, and then got tricked by AI’s hallucinations.”

After the fiasco broke out, China Everbright Bank issued two announcements in quick succession to correct the data.

In reality, this incident exposed a problem: if even the most basic internal checks aren’t done, how can the market believe that your operations can be run well?

On the day the financial report was released, China Everbright Bank’s stock price fell 2.13%. As of April 7, it was still in a downward trend, showing that capital was raising doubts.

More than the data errors, what’s more worth looking at is the specific performance report—and it’s also disappointing. In 2025, revenue was 126.31 billion yuan, down 6.72% year on year, and net profit was 38.82 billion yuan, down 6.88% year on year. China Everbright Bank Vice President Liu Yan gave three reasons for the performance decline:

Narrowing of the net interest margin; phase-wise decline in other income; overall planning for development and safety.

Put into plain, everyday language, it’s three sentences: earning less from interest; not making enough money from investment and credit cards; and having to spend money to fill risk “holes.”

Other banks have these three problems too, but Everbright’s are more serious.

Let’s go through them one by one.

Eating up the “old capital” from the net interest margin isn’t working anymore

First, let’s talk about the net interest margin.

The oldest way for banks to make money is to take deposits at low interest and lend at high interest. The difference between the two is profit—this difference is called the net interest margin.

By the end of 2025, China Everbright Bank’s net interest margin was only 1.4%, down 0.14 percentage points from the previous year. Total net interest income for the full year was 92.101 billion yuan, down 4.72% year on year.

Why did the net interest margin fall? Look at two sets of data.

In 2025, China Everbright Bank’s loan yield fell to 3.60%, down 0.62 percentage points year on year. Nowadays, many individuals and companies are more cautious when borrowing money. So, to win business, banks have no choice but to proactively cut interest rates. If you don’t cut, the bank next door will—and customers will run off. That’s why loan yields generally decline.

The deposit interest rate paid fell to 1.81%, down 0.37 percentage points year on year, with a slightly smaller drop than the loan yield. Ordinary people aren’t stupid. If banks set deposit rates too low, people simply move their money elsewhere. Banks can only grit their teeth and pay slightly higher interest to stabilize their deposit base.

Some say banks can hedge by increasing asset returns. But the reality is that there are only so many high-quality customers, and everyone is fighting for them. If you raise rates even a little, customers go to competitors. Banks are competing fiercely, especially joint-stock banks—since they don’t have the branch-network advantage of state-owned banks, nor the local protection that city commercial banks may have, they can only fight it out on price.

Of course, setting aside the broader environment, Everbright Bank’s own weaker experience in lending and deposits is also a driver of the performance decline.

First, look at lending. When it comes to what Everbright Bank’s lending experience is like, just go check on Black Cat Complaints.

In April 2025, a user took out a car collateral loan at China Everbright Bank’s Qingdao branch. The loan amount was 62,000 yuan. Each month they had to repay 2,385 yuan, including more than 1,600 yuan in principal and more than 230 yuan in interest. But that wasn’t all. Each month they also had to pay 545.6 yuan in premium. Over 17 months, that added up to 9,275.2 yuan. When you calculate it, the comprehensive interest exceeds 22%.

This user’s request was very direct: waive the premium, and refund the more than 9,000 yuan they had already paid.

As a result, Everbright Bank’s response on the platform was: “Please file a complaint through official channels,” and then it disappeared. This is the most common Everbright response template on Black Cat.

Another user’s situation was even worse. In May 2025, at China Everbright Bank’s Longyan branch, the user borrowed 100,000 yuan through Meituan Borrow, with an annualized interest rate of 18%. At that time, the one-year LPR was 3.45%, and the judicial protection cap was 13.8%—so 18% clearly exceeded the limit. The user made several early repayments, but the bank still charged interest in full. The contract was for 12 installments, but in the end interest was calculated for 13 months. The extra interest has not been refunded to this day.

And when it comes to deposits, Everbright Bank’s depositors also haven’t had less to complain about.

Some say they deposited for a three-year fixed term, but the rate is still lower than the one-year rate elsewhere. Some say their wealth managers keep calling to push sales of insurance, funds, and structured deposits; if you want to deposit in a regular fixed term, the attitude changes immediately. There are also depositors reporting that deposit interest rates change without notice. They only notice once they check their accounts and see the interest is a slice less.

Overall, the net interest margin problem has no solution in the short term. The whole industry is just enduring it. Whoever can hold out will survive to the next cycle. Whether Everbright can hold out depends on how solid its financial base is. Judging from last year’s performance, its “base” isn’t very thick.

Someone asked: if the main business earns less from interest, can other side businesses make up for it?

The answer is: not only did they not make up for it, they even dragged things down.

The side businesses didn’t step up to fill the gap

In Everbright Bank’s other income, there are two major components. One is investments—mainly buying bonds. The other is credit cards—installment fees and card swipe fees.

But these two side businesses—one depends on market conditions, the other depends on people. Uncertainty is huge.

First, let’s talk about investments.

In 2024, interest rates in the bond market trended downward. The prices of bonds held by banks went up, creating paper gains. Everbright made quite a lot from this.

In 2025, Everbright sold some bonds and realized 153.98 billion yuan. That sounds all right. But the bonds it hadn’t sold yet—because market interest rates moved upward—suffered paper losses of 43.66 billion yuan. When you add it up, total investment income in this segment was 57 billion yuan less than last year.

Next, credit cards.

In recent years, banks issued credit cards very aggressively. You could see people pushing cards everywhere on every street corner. Either it was “gifts for opening the card,” or it was “cashback for swiping.” Banks made huge profits from installment fees. Back then, credit cards were the bank’s cash cow.

Now, with many economic uncertainties, many people no longer dare to overextend themselves for consumption. So credit card transaction volumes are falling, installment balances are shrinking, and fee income naturally follows down. In 2025, Everbright’s credit card income was 26.903 billion yuan, down 18.86% year on year.

Even more troublesome is bad debts. Credit cards issued in the past few years are now starting to become overdue. Many people can’t pay back. Banks have to spend effort on collections. If they can’t recover the money, they have to set aside provisions for bad debts. That again comes out of profits. Credit card business has changed from a money-making machine into a hot potato.

In 2021, China Everbright Bank received 18,532 complaints, ranking among the top three among joint-stock banks. What’s even more absurd is that in 2022, the CBIRC disclosed that Everbright did not count complaints according to the complaint-handling methods, meaning the annual report data was far lower than the actual number of complaints.

If you go through Black Cat Complaints, you’ll find Everbright’s credit card complaints are quite numerous.

One user used an Everbright card for 6 years. When they received a phone call to encourage installment plans, they were not told what the annual interest rate and total interest would be. By the time they checked their account, they found the installment interest was already over 50,000 yuan. The user asked the bank for recordings or the contract, but after two months the bank couldn’t produce them and even claimed it had already “clearly informed” them at the time.

Another user’s principal was 43,000 yuan. They kept making the minimum repayment, and interest eventually exceeded the principal. When they called customer service, they didn’t even get a callback—only a dismissive text message.

There are also pitfalls involving automatic installment plans. Some users, completely unaware, had their card automatically split into 12 installments regardless of how much they swiped, and fees were charged. Even a 50-yuan purchase would be split into installments, causing them to be charged unjustly. There are also users who were induced into installment plans of more than 60 months; their fees were collected as more than 20,000 yuan. The bank refused to refund the fees on the grounds of “enjoying installment services.”

This is not only poor service—it’s also an ugly look.

At the performance meeting, Liu Yan said credit card interest and fee income faced phased pressure. What does “phased” mean? It’s just a convenient phrasing—because no one can clearly explain how long this phase will last.

Objectively speaking, investment business has market cycles, and credit card business also shares industry-wide characteristics. But the problem is that a bank can’t just dump all the blame on the broader environment. Service quality, installment-plan transparency, and complaint-handling efficiency—aren’t these all things the bank can control on its own? With so many user complaints, instead of solving them, it hides the data in the annual report.

It’s like an ostrich burying its head in the sand.

After talking about how much less money was earned, let’s talk about how much more money was spent.

The price of balancing development and safety

What Everbright calls “balancing development and safety” sounds lofty. In plain terms, it means putting resources into two things:

First, setting aside money for bad debt provisions. Second, controlling high-risk businesses and carrying out operational transformation.

Let’s talk about the first one. What is “risk resolution”? It means that loans made previously might not be recoverable. Banks need to set aside bad debt provisions in advance. This money is directly deducted from profits. The more loans you issue, the more bad debts you get, and the more you have to deduct.

Everbright’s 2025 net profit decline is partly because of 364 billion yuan in credit impairment losses during the year. Of course, this “loss” isn’t a true loss—it’s because the bank expects that future bad debts will increase, so it sets aside the money in advance.

At the end of 2025, Everbright Bank’s non-performing loan ratio rose to 1.27%. Non-performing loan balances increased by 3.03% year on year to 50.742 billion yuan, crossing the 500 billion yuan threshold for the first time.

Which loans are likely to go wrong? Real estate. In 2025, Everbright Bank’s real estate non-performing loan balance was 7.7 billion yuan, accounting for 15.18% of all non-performing loans—the industry with the highest share. At the performance meeting, Chief Risk Officer Ma Bo also admitted that the risk pressure on retail loans—especially those related to real estate—is relatively high.

Now let’s talk about the second one. In plain terms, it means speeding up the cleanup of existing stock risks and adjusting the business structure.

For credit cards, Everbright disposes of non-performing assets proactively. Over the full year, through ABS and transfers via the Yindeng Center, it transferred risks covering nearly 200 billion yuan of non-performing assets. For loans, as real estate risk is cleared faster, corporate lending is tilted toward directions such as technology, green initiatives, inclusive finance, and manufacturing.

Transformation is the right direction, but the price is reduced income. Previously, real estate loans had higher interest rates; now, it focuses on inclusive finance with lower rates. Previously, credit card installment fees were high; now, it doesn’t dare to do them. Once you go in and out, income drops another segment.

Compliance issues are also not small. Based on incomplete statistics, in 2025 Everbright Bank received dozens of regulatory penalty notices, with fines and confiscations totaling more than tens of millions of yuan. The main reasons involve misappropriation of credit funds and credit card installment interest/fees that are not transparent—both are old problems that keep reappearing.

Everbright has chosen long-term safety, but investors care about this year’s performance and stock price. When performance and the stock price decline, investors aren’t satisfied and turn around to sell shares. Once the stock price falls, further financing becomes harder. This creates a vicious cycle.

Conclusion

Whether it’s the annual report data mishap or the double decline in performance, in short, China Everbright Bank’s 2025 performance report doesn’t look good.

A narrowing net interest margin is driven by the broader environment; investment and credit card underperformance failing to deliver is a matter of luck and capability; overall “safety planning” is something you buy with money. Put all three reasons together, and it means you just can’t make money.

Banking life won’t go back to the way it used to be. Back then, interest rates were high, spreads were thick, and you could make money just by handing out loans. Those days are gone. Now that rates are low and spreads are thin, banks also have to guard against bad debts. Whoever sees the situation clearly first and transforms early will be able to survive.