The third-quarter earnings reports of A-share listed banks in 2025 have been fully disclosed. Against the backdrop of steady macroeconomic recovery, the banking sector delivered a performance characterized by "stable aggregate growth, optimized structure, and visible divergence."
Throughout the first three quarters, listed banks maintained steady revenue growth and stable net profits, demonstrating strong operational resilience. However, net interest margins (NIM), a core profitability driver, faced widespread pressure and contraction, posing ongoing challenges to the sector's earnings model.
Notably, different types of banks exhibited significant divergence in strategy effectiveness when addressing common pressures. State-owned banks played a stabilizing role, while some joint-stock banks and regional city/rural commercial banks achieved resilient growth through differentiated competition.
**Revenue Growth Highlights Resilience** Over 60% of A-share listed banks reported year-on-year revenue growth in the first three quarters of 2025, reflecting the sector's success in optimizing asset structures and expanding non-interest income while supporting the real economy. However, growth drivers and intensity varied significantly across banks of different sizes.
State-owned banks prioritized stability, leveraging their scale advantages to secure a solid revenue base. The "Big Six" state-owned banks maintained absolute revenue leadership and overall growth, with Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China each posting revenue growth exceeding 1.5%. However, their modest growth rates underscored the difficulty of achieving high expansion on a large base.
In contrast, some joint-stock and leading regional banks demonstrated stronger growth momentum. China Minsheng Bank's revenue grew 6.74%, well above the industry average. Regional banks like Jiangsu Bank stood out with a 7.83% revenue increase, showcasing how niche-focused strategies can unlock differentiated growth paths.
**Profitability Divergence: Smaller Banks Show Elasticity** Despite revenue growth, some listed banks reported slower net profit expansion or even profit declines despite higher revenues, highlighting how NIM compression and other factors eroded earnings conversion efficiency.
State-owned banks maintained steady net profit growth, underscoring their robust risk resilience. Despite significant NIM pressure, their profitability remained positive, supported by strong customer bases, low funding costs, and superior risk management.
Meanwhile, select smaller banks exhibited remarkable profit elasticity. Hangzhou Bank's net profit surged 14.53% YoY, Jiangsu Bank rose 8.87%, and Qilu Bank led with 16.14% growth. Their success in sustaining rapid profit growth amid NIM pressures stemmed from precise customer targeting, efficient liability cost control, and effective non-interest income supplementation.
**NIM Compression Emerges as Sector-Wide Challenge** NIM contraction was the most pressing challenge for banks in the first three quarters of 2025. Listed banks generally saw declining NIMs, driven by factors like lower loan prime rates (LPR) and adjustments to existing mortgage rates. However, responses varied significantly across bank types.
State-owned and some joint-stock banks faced sharper NIM declines, with Postal Savings Bank's NIM dropping 21 basis points (bps) due to its unique business mix. Despite a 12-bp decline, China Merchants Bank retained a leading NIM of 1.87%, illustrating how even banks with low funding costs or strong pricing power struggled to offset asset-side yield pressures.
Some banks bucked the trend. Minsheng Bank's NIM edged up 2 bps, reflecting business mix resilience. Regional outperformers like Bank of Ningbo saw smaller NIM contractions, while Jiangsu Changshu Rural Commercial Bank's NIM, though down 18 bps, remained sector-leading at 2.57%, thanks to its focus on SMEs and local market penetration. This divergence underscores how differentiated strategies help banks navigate interest rate cycles.
"Overall, the Q3 reports paint a picture of an industry advancing under pressure while growing through divergence," noted a senior banking analyst. Revenue resilience confirms the sector's symbiotic relationship with the real economy, while stable profits reflect strong operational capabilities. Though NIM compression is an unavoidable challenge, it is accelerating the shift from scale-driven expansion to refined management and diversified income structures.
As macroeconomic policies take effect, the banking environment may gradually improve. However, divergence among institutions is expected to persist. For large banks, leveraging technology to consolidate integrated service advantages and stabilize NIMs is critical. For smaller banks, deepening expertise in niche segments or regions will determine their ability to thrive amid polarization.
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