In late August 2026, China Everbright Bank Company Limited (601818) released its semi-annual report for the first half of the year. Just before the financial results were published, in early August, the bank's credit card center listed 12 batches of non-performing personal credit card overdraft assets on the Banking Credit Asset Transfer Center, involving approximately 10.8 billion yuan in outstanding principal and interest and covering nearly 442,000 borrowers.
Facing margin pressure, China Everbright Bank has shifted its focus to efficiency and cost control. For the first half of 2026, the bank reported operating income of 63.07 billion yuan, a 4.3% year-on-year decrease, down 2.85 billion yuan. Total profit reached 24.21 billion yuan, down 21.1% year-on-year, while net profit attributable to shareholders fell 24% to 18.71 billion yuan. The simultaneous decline in both revenue and profit points to a shift in the income structure.
Affected by falling market interest rates and repricing factors, the average yield on interest-earning assets dropped to 3% in the first half. The average yield on loans and advances fell further to 3.37%, down from 3.60% for the full year 2025 and 3.69% in the first half of 2025, keeping pressure on the asset side. On the other hand, liability costs have dropped noticeably. As of the end of June 2026, customer deposits reached 4.2 trillion yuan, an increase of 90.25 billion yuan from the end of last year. The average cost rate on customer deposits fell from 1.92% in the same period last year to 1.55%.
This decline in liability costs partly offset the impact of lower asset yields. Net interest income reached 46.87 billion yuan in the first half, up 3.2% year-on-year, an increase of 1.44 billion yuan, with its share of operating income rising from 68.9% to 74.3%. During the same period, the net interest margin rose 2 basis points year-on-year to 1.42%, while the net interest spread widened 5 basis points to 1.36%. However, the growth in interest income did not fully close the gap left by declining non-interest income.
Net fee and commission income stood at 9.68 billion yuan, down 7.3% year-on-year, a decrease of 770 million yuan, with its share of operating income falling to 15.3%. Within this, bank card service fees totaled 3.38 billion yuan, down 8.3% year-on-year; agency business fees were 890 million yuan, down 15.3%; underwriting and consulting fees were 580 million yuan, down 14.4%; and settlement and clearing fees reached 2.09 billion yuan. Other non-interest income also saw a significant drop, falling 35.1% year-on-year to 6.52 billion yuan. Investment income plunged from 10.38 billion yuan in the same period last year to 2.61 billion yuan, a decline of 74.8%. Although net gains on fair value changes reached 3.14 billion yuan, it was not enough to reverse the overall decline in non-interest income.
While revenue came under pressure, changes on the asset side were also evident. By the end of June 2026, total customer loans and advances reached 4.1 trillion yuan, up 2.2% from the end of last year, an increase of 88.07 billion yuan. However, this new lending was not evenly distributed across business lines. Corporate loan balances rose to 2.6 trillion yuan, an increase of 118.61 billion yuan from the end of last year, up 4.9%, lifting their share of total loans to 62.6%. Within this, loans to the leasing and business services sector reached 535.86 billion yuan, up 79.23 billion yuan, while manufacturing loans grew by 17.46 billion yuan to 576.96 billion yuan.
In contrast to corporate loan growth, retail lending contracted. As of the end of June, personal loans fell to 1.4 trillion yuan, with their share of total loans dropping to 34.8%, a decrease of 50.89 billion yuan from the end of last year, down 3.5%. Specifically, personal housing mortgage loans fell to 565.93 billion yuan, down 16.21 billion yuan; personal business loans dropped to 298.03 billion yuan, down 17.28 billion yuan; personal consumer loans fell to 197.56 billion yuan, down 2.53 billion yuan; and credit card overdraft balances declined to 353.75 billion yuan, down 14.87 billion yuan. Additionally, on-balance-sheet bill discounting rose 24% from the end of last year, increasing by 20.35 billion yuan to 105.19 billion yuan, lifting its share of total loans to 2.6%.
Overall, loan scale continued to grow in the first half, but growth was primarily driven by corporate lending, while retail lending kept shrinking, tilting the credit structure further toward the corporate segment.
Beyond the changes in credit structure, asset quality is a key focus of the semi-annual report. By the end of June 2026, non-performing loan (NPL) balances rose to 58.64 billion yuan, an increase of 7.9 billion yuan from 50.74 billion yuan at the end of 2025. The NPL ratio climbed 17 basis points from 1.27% at the end of last year to 1.44%. NPL growth accelerated in the second quarter. At the end of the first quarter, NPL balances stood at 53.45 billion yuan, with an NPL ratio of 1.32%. In the second quarter alone, NPL balances increased by 5.19 billion yuan. Changes in the five-tier loan classification were also observed, with loss-classified NPL balances rising from 19.49 billion yuan at the end of last year to 29.18 billion yuan. Special-mention loan balances fell to 68.86 billion yuan, indicating some loans had migrated downward to NPL status.
By industry, real estate remains a concentrated area of corporate NPLs. As of the end of June, NPL balances in the real estate sector rose from 7.7 billion yuan at the end of last year to 10.7 billion yuan, with the NPL ratio climbing to 7.17%. This sector accounted for 18.3% of total NPL balances and 29% of corporate NPLs. The retail segment also saw changes in asset quality. While retail loan balances decreased by 50.89 billion yuan from the end of last year, retail NPL balances rose to 21.76 billion yuan. Estimates suggest the retail NPL ratio increased from 1.46% at the end of last year to 1.54%.
Delinquency data also deserve attention. By the end of June, total overdue loans rose to 89.65 billion yuan, with an overdue ratio of 2.2%. Among these, loans overdue for more than 90 days reached 56.77 billion yuan. The NPL migration rate, calculated as loans overdue more than 90 days divided by NPL balances, reached 96.8%.
With NPLs on the rise, both impairment provisions and asset disposal have been stepped up. In the first half, China Everbright Bank made credit impairment provisions of 20.88 billion yuan, up 31.3% year-on-year, an increase of 4.98 billion yuan. In the second quarter alone, provisions reached 11.92 billion yuan, higher than the 8.96 billion yuan in the first quarter, a 33.00% quarter-on-quarter increase. During the same period, the bank completed write-offs and disposal of NPLs totaling 27.36 billion yuan, up 27.5% year-on-year, including 5.29 billion yuan recovered from written-off loans and 1.84 billion yuan from the original value of transferred NPLs.
The increase in provisions and the acceleration of NPL disposal indicate the bank is moving faster to recognize and process existing risks, which is a significant backdrop to the profit decline in the first half. By the end of June, the provision coverage ratio stood at 150.02%, down 24.12 percentage points from 174.14% at the end of 2025, and down 12.20 percentage points from 162.22% at the end of the first quarter.
As of the end of June, stage three loans amounted to 71.14 billion yuan, while NPLs were 58.64 billion yuan, a difference of 12.5 billion yuan. At the end of 2025, that gap was 19.91 billion yuan. Based on these figures, the proportion of stage three loans recognized as NPLs rose from 71.8% at the end of 2025 to 82.4%. The narrowing of this gap can follow two paths, each with different implications for provisions. One is stricter recognition: loans already impaired but not yet classified as NPLs are moved into NPL status, narrowing the gap while pushing NPLs higher. The other is off-balance-sheet transfer: disposing of stage three assets reduces both stage three and NPLs simultaneously. The interim data points to the former, with NPLs increasing by 7.9 billion yuan in the first half, while stage three loans rose only 490 million yuan from 70.65 billion yuan to 71.14 billion yuan.
Looking more closely at the credit card business, the adjustment at China Everbright Bank is even more pronounced. With the rise of mobile payments, changing consumption habits, and retail banking entering a phase of intense competition for existing customers, the growth model of relying on card issuance and transaction volume expansion is receding across the industry. Customer quality, risk costs, and operational efficiency are becoming more important considerations. The credit card business at China Everbright Bank has gone through a similar evolution. In 2006, the bank established a standalone credit card center, followed by rapid expansion. By the end of 2021, cumulative credit card issuance reached 87.24 million cards, with annual transaction volume of 2.75 trillion yuan. The peak came in 2022, when credit card transaction volume reached 2.76 trillion yuan. Since then, it has declined steadily, falling to 1.48 trillion yuan in 2025 and further to 721.53 billion yuan in the first half of 2026.
Business revenue has also been sliding. In 2020, credit card business revenue was 45.38 billion yuan; by 2025, it had fallen to 26.90 billion yuan, and in the first half of 2026, it was 12.63 billion yuan. Credit card overdraft balances have also shrunk, from 463.73 billion yuan at the end of 2022 to 353.75 billion yuan by the end of June 2026. With transaction volume, business revenue, and overdraft balances all declining simultaneously, the credit card business at China Everbright Bank can hardly continue its previous scale expansion logic. In the broader industry context, this shift is not unique. Central bank data shows that as of the end of the second quarter of 2026, the total number of credit cards and combined credit-debit cards nationwide was 677 million, down 10 million from 687 million at the end of the first quarter, and nearly 20 million fewer than at the start of 2026. Compared with the peak of 807 million cards in the third quarter of 2022, the current total has decreased by about 130 million, marking 15 consecutive quarters of decline.
As the credit card industry enters a phase of existing customer competition, the challenges banks face have also changed. Card issuance and transaction scale are no longer the only targets; the quality of existing customers, risk costs, and operational efficiency per customer are increasingly important. This is the backdrop for China Everbright Bank's adjustment of its credit card operating model. The shift from expansion to managing existing customers brings not only changes in scale but also adjustments in operational methods. In recent years, regulators have continued to strengthen oversight of credit card and consumer finance businesses. At the end of 2024, a penalty of over 10 million yuan imposed by the central bank on China Everbright Bank's head office involved violations related to credit information collection and related management rules, with accountability extended to responsible persons at the credit card center. In July 2026, the Nanchang branch was also subject to administrative penalties for irregularities in credit card installment business.
At the same time, China Everbright Bank has been adjusting its credit card operating model. In 2024, the bank proposed a reform direction focused on returning to the essence of consumption and returning to branch operations. In 2025, it further pushed the transition from a direct sales model to localized operations. The adjustment began in the second half of 2024. According to the head of the credit card center, the bank launched a branch localization transformation in the second half of 2024, promoting the return of credit card operations to branches and strengthening localized management. 2025 marked the first full year of this transformation. Vice President Qi Ye stated at the 2025 annual results conference that the bank had fully mobilized branch and sub-branch forces, deeply cultivated consumer scenarios, and accelerated structural optimization centered on suitable customers. In risk governance, the bank revised core approval policies, continuously optimized risk control models, strengthened refined management of existing customers, reduced exposure to high-risk customers, and improved post-lending collection efficiency.
On the other side, the disposal of existing NPL assets has also been accelerating. Public information shows that China Everbright Bank transferred approximately 5.8 billion yuan in credit card NPLs in 2023, and in May 2025, it transferred 11.55 billion yuan in credit card NPLs at a discount of approximately 0.5% of face value. In early August this year, the credit card center again listed 12 batches of non-performing personal credit card overdraft assets on the Banking Credit Asset Transfer Center, involving approximately 10.8 billion yuan in outstanding principal and interest and 442,000 borrowers. The average overdue period for these assets is relatively long, with some exceeding 2,000 days.
From adjusting the operating model to disposing of NPL assets, China Everbright Bank is effectively changing the way it runs its credit card business while also dealing with the legacy risks accumulated during the expansion phase. But risk disposal itself is not the end point. Currently, credit card overdraft balances are still declining, retail lending remains in contraction overall, and the retail NPL ratio has risen. The risks left by the old business model need continued digestion, while new customers and consumption scenarios need to be rebuilt.
In the context of the semi-annual report, the 10.796 billion yuan credit card NPL package in early August is not an isolated event. The contraction of retail lending, the increase in NPLs, the rise in impairment provisions, and the batch disposal of credit card NPLs are all threads of the same operational transformation. For China Everbright Bank, the key point ahead is not just how much more asset scale can grow. After this round of adjustment, whether the credit card business and retail operations as a whole can find new growth momentum on a rebalanced risk-return basis may be the more critical question.
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