On June 25th, at the 2025 annual general meeting of shareholders for CM BANK, the bank's Party Committee Secretary and designated President, Wang Xiaoqing, acknowledged that the institution currently faces numerous challenges. Some of these are common across the banking sector, including the narrowing of net interest margins (NIM) during a low-interest-rate cycle, the industry-wide push to reduce fees and offer concessions to better support the real economy and improve customer satisfaction, and a decline in the repayment capacity and willingness of some retail banking clients.
Furthermore, Wang pointed out that CM BANK is also contending with specific structural factors. Firstly, the bank has a high proportion of demand deposits. In a low-rate environment, the cost of these liabilities declines only to a limited extent, while asset yields fall in tandem with declining market rates. Secondly, CM BANK is characterized by its strong retail banking focus and a high proportion of non-interest income, which subjects it to greater periodic pressure in an environment of fee reductions. Thirdly, the bank holds a high proportion of retail credit assets, making it more vulnerable to periodic stress in retail credit risk.
The combination of these industry-wide and bank-specific structural factors means that CM BANK's business cycle is slightly out of sync with that of its peers. This divergence, in turn, contributes to the differing stock price performances observed among various banks.
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