Dividend yield of 5.7% crushes savings? Industrial Bank's net profit last year was 77.4 billion yuan, with a full-year dividend payout of 22.56 billion yuan, as the interest margin continues to narrow.

This article is sourced from Times Finance. Author: He Xiulan

On the evening of March 26, Industrial Bank (601166.SH) released its 2025 annual report. Against the backdrop of continued compression in net interest margins across the industry, the bank has sustained year-over-year growth in profits for two consecutive years.

Data from the financial report show that during the reporting period, Industrial Bank’s total assets exceeded 11 trillion yuan, and full-year operating income reached 110k yuan, up 0.24% year over year. Attributable net profit amounted to 212.74B yuan, up 0.34% year over year, with overall performance outperforming the large shareholding banks.

However, pressures such as continued narrowing of net interest margin and a decline in investment income also remain. During the reporting period, Industrial Bank’s net interest income grew, and the structure of its non-interest income continued to improve. In particular, net fee and commission income increased by 7.45% against the trend. Affected by factors such as a decline in return on assets, the bank’s net interest margin narrowed by 11 basis points year over year to 1.71%. However, through its “build the liability base first” strategy to reduce deposit costs, it effectively offset the pressure on net interest margins.

Regarding cash dividends, Industrial Bank’s 2025 final dividend proposal is to pay cash dividends of 5.01 yuan per 10 shares (inclusive of tax). Combined with the interim cash dividends of 5.65 yuan per 10 shares (inclusive of tax) already paid, total cash dividends for the year amount to 22.56 billion yuan. The cash dividend payout ratio first exceeded 30%. This proposal will be implemented after it is reviewed and approved at the company’s 2025 annual general meeting of shareholders.

On March 27, Industrial Bank’s A-share closed at 18.70 yuan per share. Based on the latest closing price, the dividend yield reached 5.70%.

Image source: Yichechuangyi

Net interest margins continue to narrow, and non-interest income faces pressure

From the earnings side, growth pressure may come from the narrowing net interest margin. The financial report shows that in 2025, the bank’s net interest margin was 1.71%. While it fell by 11 basis points year over year, the bank’s decline was better managed than the industry average. The net interest spread was 1.50%, down 6 basis points year over year.

A decline in asset-side yield may be the reason for the narrowing net interest margin. In 2025, the average yield on corporate and personal loans of Industrial Bank fell from 4.20% to 3.59%, and the decline in personal loan yields was even greater, reaching 90 basis points.

Industrial Bank Chairman Lü Jiajin, at the earnings release conference held on the morning of March 27, said that in recent years, commercial banks’ asset yields have generally been in a downward channel. Industrial Bank has insisted on controlling liability costs as the top priority for stabilizing net interest margins, and has taken multiple measures to reduce liability costs, including strictly implementing the deposit interest rate self-discipline mechanism and actively replacing time deposits with higher interest rates. During the year, the cost of liability interest paid declined by 43 basis points year over year.

Against this backdrop, Industrial Bank’s management of liability costs has improved significantly, and deposit structure optimization has produced results. In 2025, the deposit cost of interest paid was 1.65%, down 33 basis points year over year. Specifically, the interest paid rates on corporate and wholesale deposits, retail deposits, and interbank deposits were reduced by 34 basis points, 31 basis points, and 59 basis points, respectively. The “build the liability base first” strategy has worked, effectively easing the pressure from net interest margin compression.

Although liability costs improved substantially, it is still difficult to fully offset the decline in asset yields. Net interest margin faces further pressure, becoming a challenge for Industrial Bank’s profit growth in 2026.

From the structure of operating income, Industrial Bank shows the features of “net interest income supporting the base” and “non-interest income contracting slightly.” In 2025, the bank’s interest-earning asset size grew steadily, and net interest income reached 77.47B yuan, up 0.44% year over year, maintaining positive growth for three consecutive years.

However, affected by factors such as fluctuations in market interest rates, in 2025 Industrial Bank’s non-interest net income was 148.75B yuan, down slightly by 0.20% year over year. This was mainly dragged down by a year-over-year decline of 24.54% in investment gains and losses. Although the profit and loss from fair value changes surged by 160.06%, it still could not fully offset the fluctuations. That said, benefiting from coordinated and synergistic efforts among its “large investment banking, large asset management, and large wealth management” platforms, Industrial Bank achieved net fee and commission income of 63.99B yuan, up 7.45% year over year.

At the above-mentioned earnings conference, Industrial Bank’s Deputy Governor Zhang Min said that in 2026, Industrial Bank will promote the steady development of its wealth management business from two major dimensions: the product system and customer service. On the product side, it will closely follow market timing. In a low-interest-rate, high-volatility environment, on the one hand, it will build a solid core holdings base, improve its cash and fixed-income product体系, and upgrade the “deposit+” matrix to cover short-, medium-, and long-term fund allocation, optimizing the functions of “spare change +” to improve the efficiency of managing idle funds. On the other hand, it will open up and empower, building an all-market product shelf and establishing a pyramid-shaped product system with optionality, enhancing yield sensitivity through a small amount of optionality, and meeting customers’ diversified asset allocation needs. On the service side, it will directly face market volatility by using “spare change+”, “deposit+”, and insurance to build a bottom layer of asset safety, offsetting market uncertainties with more certain returns. At the same time, relying on low-volatility “fixed-income+” and steady FOF-type products, it will guide customers toward long-term investing and moderate participation, smoothing short-term volatility.

Total assets exceed 11 trillion, and the NPL ratio ticks up slightly

As of the end of 2025, Industrial Bank Group’s total assets were 11.09 trillion yuan, up 5.58% year over year, keeping steady its position as the second largest among joint-stock commercial banks by scale.

On the asset side, as of the end of 2025, Industrial Bank’s total loan balance was 5.95 trillion yuan, up 3.70% year over year. As the bank’s “fourth business card,” the technology finance financing balance reached 2 trillion yuan, with the loan balance at 1.12 trillion yuan as of the end of 2025. Compared with the end of 2024, these figures increased by 15.98% and 18.47%, respectively.

Industrial Bank Deputy Governor Zeng Xiaoyang revealed at the above-mentioned earnings conference that as of the end of 2025, the bank served 365k technology enterprises. The financing related to technology enterprises and technology-related industries exceeded 2 trillion yuan, up about 16% year over year. If only technology loans are counted, the growth rate is even higher, with the scale ranking among the top in the industry.

In addition to traditional credit support, banks also need to connect with compliant capital channels for enterprises. In November 2025, AIC (financial asset investment company) under Industrial Bank was approved by the National Financial Regulatory Administration to commence operations, becoming the first AIC under a joint-stock bank to be approved and start operations.

Zeng Xiaoyang said at the above-mentioned earnings conference that the establishment of AIC, to a certain extent, meets this demand. On the one hand, the bank can use AIC to carry out debt-to-equity swaps and equity investments, forming growth partners with small and medium-sized technology enterprises, and the bank can provide various resource supports for them based on the group’s advantages. On the other hand, through a linkage model of equity, debt, and loans, the bank can better balance risk and returns while also expanding its customer base. “In the next stage, Industrial Bank will fully rely on the group’s advantages in full licenses, including AIC, to strengthen business synergies,” Zeng Xiaoyang said.

Xue Hongyan, a special research fellow at SuShang Bank, told Times Finance that the importance of technology finance stems from new quality productive forces led by technology innovation, which features high investment, high risk, and long cycle characteristics. Traditional financial services are hard to adapt to these needs, so it is necessary to rely on policy guidance to break through bottlenecks. In the future, when building institutional mechanisms that suit technology innovation, the banking industry needs to make breakthroughs simultaneously in both “short-board补齐” and “long-board strengths strengthening.” “Short-board补齐” requires improving the intellectual property assessment system and enhancing the precision of risk pricing. “Strengthening long boards” should focus on reinforcing digital transformation and using technology tools to improve risk control efficiency. At the same time, it should promote coordinated development among equity, debt, and loans, and further deepen pilot programs for equity investment in tech-innovation enterprises, providing all-around and multi-layer financial support for technology innovation.

It is worth noting that in 2025, Industrial Bank’s asset quality remained generally sound, but faced marginal pressure. As of the end of 2025, Industrial Bank’s balance of non-performing loans was 25.89B yuan, up 110k yuan year over year. The non-performing loan ratio was 1.08%, up slightly by 0.01 percentage point from the previous year. The provision coverage ratio was 228.41%, down 9.37 percentage points year over year. The loan loss reserve ratio (拨贷比) was 2.47%, down 0.08 percentage points year over year. Its risk offsetting capacity has slightly declined, but it remains at a relatively good level in the industry.

In addition, in 2025, Industrial Bank’s risks in key areas tended to converge. Specifically, newly incurred non-performing loans for corporate real estate declined by 41.85% year over year, while newly incurred non-performing loans for credit cards declined by 12.98%. As of the end of 2025, Industrial Bank’s outstanding financing balance for corporate real estate was 110.9k yuan, down 59.5k yuan from the end of the previous year, with risk mitigation showing effective results.

At the above-mentioned earnings conference, Lü Jiajin disclosed that in 2025, Industrial Bank continued to generate returns from non-performing assets, achieving the collection and recovery of some loans that had been written off in accounting. It recovered 16.2 billion yuan, which strongly supported profit growth.