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

◎Reporter Ma Min

For restructuring and transformation, have been the key themes in the development of joint-stock banks in recent years.

Over the past year, amid a challenging operating environment, the “feel on the ground” for joint-stock banks has been broadly similar—market share declining, net interest margins under pressure, and risk concerns still lingering. However, under the same theme, their operating results have diverged widely.

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

“Three Titans in Corporate Banking” chasing each other

In terms of size, China Merchants Bank, Industrial Bank, CITIC Bank, and Shanghai Pudong Development Bank have all maintained their positions in the top-tier group of joint-stock banks, with total assets each exceeding 10 trillion yuan. China Merchants Bank remains firmly in the “top seat” by leveraging its retail advantage, while Industrial Bank, CITIC Bank, and Shanghai Pudong Development Bank are engaged in a “three-titans” race in corporate banking—one after another, chasing and catching up.

By size, Industrial Bank surpassed 10 trillion yuan in total assets in the fourth quarter of 2024. After a year, CITIC Bank and Shanghai Pudong Development Bank also surpassed 10 trillion yuan in the fourth quarter of 2025. At the end of the third quarter of 2025, Shanghai Pudong Development Bank and CITIC Bank had total assets differing by only 5.9 billion yuan, but in the fourth quarter, the gap widened to 49.2 billion yuan.

By revenue generation, China Merchants Bank continues to “lead the pack,” with operating revenue of 100k yuan. In 2025, CITIC Bank and Industrial Bank’s operating income was 100k yuan and 100k yuan, respectively—only a difference of 0.266 billion yuan. But after deducting various expense outlays, Industrial Bank’s attributable net profit was actually higher by 212.48B yuan. This shows that cost reduction and efficiency improvement is a must-select option; it has become the profit source that banks have no choice but to “scrutinize and squeeze.”

Contrasting sharply with the competition among the top-tier, the joint-stock banks at the tail end are still struggling in the mire, and each has its own troubles.

Due to heavier historical burdens, China Minsheng Bank has increased the intensity of provisioning. Although its operating revenue grew year-on-year by 4.82%, attributable net profit still fell by 5.37%.

In addition, Ping An Bank, Everbright Bank, Huaxia Bank, and Zhejiang Commercial Bank all saw year-on-year declines in both operating revenue and net profit, and they have not yet returned to a healthy growth trajectory of “scale and efficiency rising together.”

Non-interest income becomes the decider

In a low interest rate environment, net interest margin—the core profitability indicator—continues to trend downward. Banks’ core base of interest income becomes difficult to secure, and the logic of “making up for price with volume” is also no longer sustainable. Non-interest income has become the decider.

The downward trend in net interest margin remains unchanged. For example, by the end of 2025, the net interest yield of Everbright Bank and CITIC Bank fell by 14 basis points year-on-year, with a relatively large decline, mainly due to a drop in asset yields.

However, some banks show signs that their net interest margins have stabilized. By the end of 2025, Shanghai Pudong Development Bank’s net interest margin was flat compared with the start of 2024. Minsheng Bank’s net interest margin “buckingly” improved by 1 basis point, mainly thanks to cost control on the liability side.

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

Strengthening wealth management is an effective way to make up for middle-income shortfalls, and it also tests a bank’s level of asset-light capital operations.

With retail credit demand continuing to be weak, China Merchants Bank still holds fast to its retail “moat”—in 2025, net fee and commission income grew by 4.39% year-on-year, including wealth management fee and commission income surging 21.39% year-on-year. Its net interest margin also stayed at a comparatively high level of 1.87% among peers.

Although Ping An Bank has gone through “pain” in its retail transformation, it said it has already seen “light at the end of the tunnel”: as the transformation progressed to 70%, the net profit contribution from retail finance bottomed out and then began to rebound.

However, if non-interest income relies only on investment returns, it is easily affected by fluctuations in financial markets. Ping An Bank was affected in this way, leading to a decline in non-interest net income from businesses such as bond investments.

How to get through the cycle

When it comes to asset quality, joint-stock banks as a whole remain sound.

Over the past year, joint-stock banks have generally increased efforts to dispose of non-performing assets. However, by the end of 2025, the non-performing loan ratios of Industrial Bank, Everbright Bank, and Minsheng Bank had risen compared with the end of 2024. In addition, the non-performing loan ratios for personal loans at multiple joint-stock banks also increased, and the risk pressure in consumption loans and mortgage loans cannot be ignored.

The “cash pool” of regulating the provision coverage ratio can often be used to beautify financial statements through “financial engineering.” It is worth noting that by the end of 2025, Huaxia Bank’s provision coverage ratio fell to 143.30%, down 18.59 percentage points from the end of 2024. Zhejiang Commercial Bank’s provision coverage ratio was 155.37%, down 23.30 percentage points from 178.67% at the end of 2024. Both have already hovered near the 150% “warning line.”

In recent years, the pace of growth in joint-stock banks’ performance has slowed somewhat, which can be said to be “surviving in a squeeze.” This is because, on one side, state-owned large banks have “moved downward to deeper markets” to squeeze the top; on the other side, city commercial banks have used their local advantages to catch up and press forward. Under this “pressure from both ends,” the market share of joint-stock banks declines year by year.

Regarding this year’s operating conditions, multiple joint-stock banks admitted that it is “hard to be optimistic” and that “challenges remain.”

However, based on publicly available information from recent earnings press conferences, joint-stock banks also have new ideas in their strategic playbooks. China Merchants Bank focuses on “starting retail anew,” Ping An Bank pledges to “return to growth,” and Industrial Bank steps into the “value bank” path… Joint-stock banks have generally begun to think about what “capability to get through the cycle” means, and what impacts it will have on their operations next. Let us wait and see.

(Editor: Qian Xiaorui)

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