The net interest margin (NIM) of the banking sector remains at a historical low. According to the latest data from the National Financial Regulatory Administration, the NIM for commercial banks stood at 1.42% at the end of the fourth quarter of 2025, marking the lowest level on record and remaining unchanged for three consecutive quarters. Over the past five years, the NIM of China's banking industry has experienced a sharp decline, falling from a comfortable average of around 2.1% in 2020 to the current 1.42%. Although the trend has stabilized in an "L" shape, it persists at a historical low. Why is NIM so critical? Essentially, banking is a business of buying low and selling high using funds. Banks profit from the spread between the interest paid on deposits and the interest earned from loans and investments. The NIM represents the return on this spread, akin to a company's gross profit margin. A higher NIM indicates greater profitability per deposit and loan transaction for a bank; conversely, a lower NIM signifies a continuous narrowing of profit margins. It is the bank's lifeline, determining its ability to sustain profitability and maintain stability.
While the entire industry balances on the edge of thin profits, joint-stock banks face even greater challenges. Sandwiched between large state-owned banks with their advantage in low-cost liabilities and the nimble competition from smaller banks, the pressure on joint-stock banks has intensified significantly. However, during this industry adjustment period, one bank is demonstrating a leading capacity to break through the challenges.
On March 23, Ping An Bank Co.,Ltd. held its 2025 annual results presentation, disclosing its full-year operational data. The bank reported annual operating revenue of 131.442 billion yuan, a decrease of 10.4% year-on-year. Net profit attributable to the bank's shareholders was 42.633 billion yuan, down 4.2% year-on-year. While the year-on-year figures show a decline, the key positive is the improving trend. The rate of revenue decline narrowed by 0.5 percentage points compared to the previous year, and the non-performing loan formation rate decreased by 0.17 percentage points year-on-year. The NIM fell to 1.78%, but the rate of decline has narrowed, showing signs of stabilization, and remains above the industry average of 1.42%.
This performance is underpinned by Ping An Bank's precise efforts in reducing liability costs. According to the financial report, the average interest rate paid on customer deposits in 2025 was 1.65%, a significant decrease of 42 basis points year-on-year. The interest rate on interest-bearing liabilities was 1.67%, down 47 basis points year-on-year. Simply put, a reduction of 42 basis points (0.42%) on a deposit base of 3.58 trillion yuan translates to annual interest expense savings amounting to tens of billions of yuan. More notably, this cost reduction was achieved without sacrificing deposit scale. By the end of 2025, the bank's customer deposits reached 3.58 trillion yuan, an increase of 1.4% year-on-year. Within this, the average daily balance of demand deposits was 1.19 trillion yuan, up 5.8% year-on-year. The rising proportion of demand deposits indicates a further increase in low-cost funding, which solidifies a safety cushion for stabilizing the NIM and strengthens the core advantage on the liability side.
President Ji Guangheng stated clearly at the results presentation, "The most difficult period for Ping An Bank has passed. The primary goal for 2026 is to fully strive for a return to growth."
The only constant is change. Facing a challenging environment, the entire industry is seeking transformation. Ping An Bank's ability to thrive under pressure is intrinsically linked to its own strategic shifts. As early as 2024, President Ji Guangheng proposed a twelve-character strategic guideline: "Strengthen Retail, Refine Corporate Banking, and Specialize in Interbank Business," providing clear direction for concentrating resources and driving transformation. Organizational restructuring became the breakthrough point for this change. Historical information shows that in 2013, Ping An Bank's head office had 79 departments. Through continuous optimization, this number has been reduced to just 32 today. Eliminating redundant functions not only cuts costs but also focuses resources on core operations.
At the beginning of 2026, Ping An Bank undertook a further significant "slimming down," with the core objective being efficiency enhancement. In January, the bank amended its articles of association, receiving regulatory approval to formally abolish the board of supervisors. The supervisory functions were transferred to the board's audit committee, and the rules of procedure for the board of supervisors were simultaneously repealed. In today's rapidly changing financial markets, efficiency is a core competitive advantage. Ping An Bank recognizes that only by turning the blade inward can it respond swiftly to market dynamics.
Following efficiency gains comes quality improvement. Consider a straightforward data point: in 2024, the net profit from Ping An Bank's retail business was only 289 million yuan. In 2025, this figure surged to 2.683 billion yuan, an increase of nearly ten times year-on-year. Is this a sudden explosion? Certainly not. This outcome appears to be the result of deliberate and strategic adjustments. Firstly, the bank proactively scaled back high-risk unsecured retail loans, such as "Xinyidai," shifting focus from blind pursuit of scale expansion to prioritizing the development of medium-risk, medium-return products like mortgage loans and auto finance. Data shows that by the end of 2025, mortgage loans accounted for 62.9% of total personal loans. Residential mortgage loans grew by 8.9% year-on-year. The outstanding balance of auto finance loans reached 304.801 billion yuan, up 3.7% year-on-year, with new loans for personal new energy vehicles amounting to 72.626 billion yuan, a 13.9% increase. The advantage of these businesses lies in their controllable risk and stable returns, which help reduce the overall risk exposure of the retail asset portfolio while providing sustained profit support for the retail business.
Concurrently, the bank continued to clear out high-risk retail assets. By the end of 2025, the outstanding balance of personal loans was 1,727.294 billion yuan, down 2.3% year-on-year. High-risk categories such as credit card receivables and consumer loans both recorded year-on-year decreases, indicating continuous improvement in asset quality. The turnaround in the retail business is precisely the result of proactive adjustments to "retain the good and discard the bad."
This improvement can be attributed to two key factors: first, enhanced risk control, with retail credit impairment losses reduced from 48.7 billion yuan to 37.6 billion yuan, and the non-performing loan ratio for personal loans decreasing by 0.16 percentage points, leading to lower impairment expenses due to improved asset quality; second, effective cost control, with business expenses optimized from 22 billion yuan to 20.8 billion yuan, cutting unnecessary spending and enhancing profit efficiency. Whether through organizational streamlining or business portfolio optimization, the bank's approach is characterized by substance over form, driving tangible change.
As discussed, NIM is not only the bank's lifeline but also a gauge for the flow of funds into the real economy. A high NIM (high water level) gives banks the capacity and incentive to lend and support the real economy; a low NIM (low water level) reduces this motivation, potentially decreasing the flow of funds to the real sector. China's 15th Five-Year Plan explicitly emphasizes strengthening the financial system's role in serving the real economy. Ping An Bank's strategic acumen lies in integrating service to the real economy into its core strategy. This is not merely about fulfilling social responsibility but about identifying a new, sustainable profit pillar in an era of thin industry margins.
Consider some concrete data: The outstanding balance of corporate loans was approximately 1,663.5 billion yuan at the end of 2025, up 3.5% year-on-year. Corporate deposits stood at about 2,295.3 billion yuan, an increase of 2.2% year-on-year. This indicates that the bank not only has funds to lend to the real economy but also successfully attracts deposits from it, creating a virtuous cycle of "supporting the real economy—funds flowing back."
Secondly, the support intensity is noteworthy, particularly in inclusive finance. In 2025, Ping An Bank disbursed 286.126 billion yuan in new loans to inclusive small and micro enterprises, a surge of 29.5% year-on-year. By the end of 2025, the outstanding balance of inclusive small and micro enterprise loans reached 484.522 billion yuan, serving 909,400 borrowing entities, effectively alleviating the financing difficulties and high costs faced by these businesses.
Furthermore, the approach is not about indiscriminate lending but targeted cultivation. The bank focuses on key sub-sectors such as manufacturing, energy, automotive, healthcare, and the digital industry, tailoring exclusive financial service solutions based on industry characteristics and corporate needs to address specific financing, settlement, and other requirements. For instance, it provides equipment renewal and technological upgrade loans for traditional manufacturing and offers comprehensive services like equity financing and supply chain finance for emerging industries. By the end of 2025, the loan balance for these key sub-sectors had increased by 50.146 billion yuan from the end of the previous year, simultaneously solidifying the corporate banking foundation and creating a differentiated competitive advantage for a win-win outcome.
Reviewing Ping An Bank's annual report leaves a strong impression of a bank that is understated yet stable. The transformation of the banking industry is a protracted battle with no shortcuts. Ping An Bank's current path is remarkably pragmatic. It is not chasing a myth of dramatic reversal but is steadily, step by step, repairing its balance sheet and enhancing business quality on the edge of industry-wide thin profits. As the 15th Five-Year Plan continues to be implemented, the requirement for financial services to support the real economy will deepen further, allowing the value of Ping An Bank's deep cultivation of the real economy to be increasingly realized. The dividends from organizational reform and retail business transformation are also expected to gradually materialize in the pursuit of the "return to growth" target for 2026. As President Ji Guangheng stated, "the most difficult period has passed," but the journey ahead for Ping An Bank remains a long one.
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