China Everbright Bank Company Limited released its interim report for the first half of 2026 on the evening of August 28.
Amid widespread operational pressures across the commercial banking sector, this mid-year report reveals a complex financial picture: total assets and liabilities remained stable, and cost reduction on the liability side helped stabilize the net interest margin, but substantial credit impairment provisions and a contraction in non-interest business dragged down the period's profitability.
In the first half of the year, the bank reported operating income of RMB 63.068 billion, a year-on-year decline of 4.32%, while net profit attributable to shareholders fell 24.01% to RMB 18.711 billion.
Despite the modest revenue dip, the net profit slump far exceeded the revenue decline, a notable divergence driven primarily by concentrated credit impairment provisions.
During the reporting period, the bank booked credit impairment losses of RMB 20.879 billion, an increase of RMB 4.977 billion year-on-year, up 31.30%. Within this total, impairment losses on loans and advances reached RMB 22.024 billion, an additional RMB 6.625 billion compared to the same period last year, following reversals on certain investment asset impairments.
Meanwhile, write-offs and disposals of loans and advances totaled RMB 27.36 billion in the first half, already approaching the RMB 27.685 billion written off for the full year of 2025. Management's intensified efforts to clear risk and accelerate write-downs directly squeezed operating profit margins.
From an income structure perspective, net interest income and non-interest income moved in opposite directions.
Net interest income rose 3.17% year-on-year to RMB 46.871 billion, bucking the trend. The net interest margin (NIM) reached 1.42%, up 2 basis points year-on-year, marking its first increase in nearly two years. The net interest spread widened 5 basis points to 1.36%.
The improvement in the interest margin was primarily driven by declining costs on the liability side.
Affected by LPR cuts and concessions to the real economy, the average yield on loans fell 32 basis points to 3.37%.
However, the average cost of customer deposits dropped sharply by 37 basis points to 1.55%, with cost rates on both corporate time deposits and retail time deposits falling by more than 40 basis points. The decline in liability costs more than offset the drop in asset yields, leading to simultaneous improvements in both the net interest spread and NIM.
Non-interest business was impacted by market conditions and fee adjustments.
Dragged down by fee reductions on bank cards and agency services, net fee and commission income fell 7.34% to RMB 9.676 billion. Due to capital market volatility, investment income plunged from RMB 10.377 billion in the same period last year to RMB 2.613 billion, a decline of 74.82%, becoming the primary driver of the non-interest income contraction. Other income, including investment gains, dropped 35.07% to RMB 6.521 billion.
The credit structure shows a trend of corporate lending expansion and retail lending contraction.
Corporate loan balances rose 4.88% from the end of last year to RMB 2.55 trillion, with funds mainly channeled into manufacturing, leasing, and business services sectors. Retail loan balances (excluding credit cards) fell 3.28% to RMB 1.06 trillion.
Although retail AUM reached RMB 3.29 trillion and wealth management product scale grew 8.05% to RMB 2.10 trillion, the contraction in retail credit continues to pressure interest income contributions from the retail segment.
Changes in asset quality metrics also warrant attention.
As of the end of June, non-performing loan (NPL) balances rose by RMB 7.897 billion to RMB 58.639 billion, pushing the NPL ratio up 0.17 percentage points to 1.44%. Among these, NPLs in the real estate sector increased to RMB 10.701 billion, accounting for 18.25% of total NPLs.
Due to risk exposure and impairment provisions, the provision coverage ratio fell 24.12 percentage points from the end of last year to 150.02%, signaling a sharply narrowed safety buffer.
The thinning provision cushion implies that if credit risks continue to surface in the second half, the bank will face a trade-off between maintaining provision adequacy and smoothing its income statement.
Overall, China Everbright Bank Company Limited improved its core interest income through liability management in the first half, while its customer base across wealth management and other segments remained stable. The board also proposed an interim dividend of RMB 0.81 per 10 shares. However, the pace of asset quality clearance and the shrinking room for provision adjustments remain key dimensions for market observation in the period ahead.
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