With listed banks successively releasing their 2025 annual performance reports recently, the net interest margin and its future trajectory have become a key focus. Data shows that as of March 31, 2026, 22 A-share listed banks have disclosed their net interest margin for 2025. Analysis reveals three distinct characteristics: first, the overall figure still shows a year-on-year decline, but the rate of decrease has narrowed; second, on a quarterly basis, the net interest margin for many banks has shown signs of stabilization; third, some banks reported a net interest margin that was flat or even increased compared to the previous year.
At the performance briefings of multiple listed banks, a common industry question emerged: is the net interest margin gradually stabilizing? In response, several senior bank executives provided cautiously optimistic answers, suggesting that influenced by regulatory guidance and the repricing of maturing term deposits, the decline in net interest margin is expected to narrow this year, with a clear trend of marginal stabilization becoming apparent.
The narrowing decline in net interest margins across many banks has been a recent trend. Factors such as supporting the real economy and adjustments in market interest rates have contributed to a general downward pressure. Data indicates that as of March 31, 2025, among the 22 A-share listed banks that disclosed figures, the majority still saw a year-on-year decrease in their 2025 net interest margin, yet a trend of quarterly stabilization was evident. Furthermore, four banks—Chongqing Bank, MINSHENG BANK, Shanghai Pudong Development Bank, and Ruifeng Rural Commercial Bank—saw their net interest margins rise or remain flat compared to 2024.
Year-on-year, while most banks experienced a decline, the magnitude of the drop lessened. For instance, among the big six state-owned banks, Postal Savings Bank of China demonstrated a relatively strong performance, with a 2025 net interest margin of 1.66%. Through proactive management, its marginal trend improved throughout the year. Industrial and Commercial Bank of China reported a 2025 net interest margin of 1.28%, a decrease of 14 basis points from 2024, but the downward trend narrowed, with the year-on-year decline shrinking by 5 basis points.
On a quarterly basis, some banks showed a trend of phased stabilization. Of the 22 banks, nine had a net interest margin that was flat or showed a slight increase compared to the third quarter, while seven saw a decline of only 2 basis points from the first three quarters. China Merchants Bank reported the highest net interest margin among the disclosed banks at 1.87% for 2025. Looking at its quarterly data: 1.91% in Q1, 1.86% in Q2, 1.83% in Q3, followed by a rebound in Q4. Following a one-time repricing-driven decline early in the year, Postal Savings Bank of China saw its net interest margin decline narrow significantly, with only a 1 basis point drop quarter-on-quarter in the subsequent three quarters.
Expanding the sample size, the marginal stabilization of net interest margins at listed banks aligns with the broader industry trend. Data released by the National Financial Regulatory Administration shows that as of the end of the fourth quarter of 2025, the net interest margin for commercial banks stood at 1.42%, remaining stable for two consecutive quarters.
To counter the pressure of declining interest margins, banks have been working on both the asset and liability sides, optimizing their balance sheet structures to maintain steady development. For 2025, the reduction in liability costs played a positive role in improving interest margins. China Construction Bank reported a net interest margin of 1.34% for 2025. The annual rate of decline narrowed by two basis points year-on-year, and the quarterly decline showed a trend of marginal narrowing. Sheng Liurong, Chief Financial Officer of China Construction Bank, explained at the earnings briefing that the narrowing marginal decline in 2025 could be attributed to three factors: first, the repricing of existing loans was largely complete, easing the downward pressure on loan yields; second, a concentration of maturing term deposits, which carry relatively high interest rates, led to a significant decrease in the cost of general deposits, partially offsetting the impact of lower loan yields on the net interest margin; third, effective active balance sheet management and structural optimization helped mitigate the effect of falling loan yields.
Notably, MINSHENG BANK's net interest margin for 2025 was 1.40%, a slight increase of 1 basis point from 1.39% in 2024. The bank's annual report analysis attributed this stability to the decline in liability costs. Data shows that as of the end of December 2025, MINSHENG BANK's deposit cost rate was 1.74%, down 40 basis points year-on-year. The average cost rate for interbank liabilities was 1.81%, down 46 basis points year-on-year, with the cost rates for both deposits and interbank liabilities maintaining a downward trend throughout the quarters.
After analyzing the annual reports of 13 banks disclosed before March 29, 2026, CITIC Securities analysts Xiao Feifei and Hu Jiajun noted that the average yield on interest-earning assets and the average cost of interest-bearing liabilities for these banks were 3.10% and 1.65%, respectively, down 48 basis points and 44 basis points year-on-year. The similar magnitude of decline on both sides of the balance sheet indicates that cost savings from liability repricing and structural optimization effectively offset the drop in asset-side pricing.
The trend of marginal stabilization is expected to continue. Industry analysts believe that, guided by policies aimed at curbing excessive competition and stabilizing interest margins, newly issued loan rates are likely to stabilize. 2026 is expected to be a peak year for the repricing of maturing deposits, which will help improve banks' liability costs. Considering both sides of the balance sheet, the net interest margin is projected to stabilize in 2026.
On one hand, policy signals supporting stable interest margins are being consistently communicated. Lu Wei, President of Postal Savings Bank of China, stated that for the current year, measures such as the central bank's symmetric interest rate cuts, the strengthened role of self-regulatory mechanisms, and the regulatory authority's actions against unfair competition collectively create a supportive external environment that places significant emphasis on stabilizing interest margins.
On the other hand, the repricing of term deposits provides favorable conditions for commercial banks to improve liability costs. In 2026, a significant volume of high-interest term deposits is set to mature, with estimates from different institutions ranging from 50 to 80 trillion yuan. Yang Jun, Vice President of Bank of China, explained that since the second half of 2025, the volume of maturing term deposits at the bank has increased, with a high proportion of these maturing funds still being retained as deposits. Yang anticipates that as current deposit rates are lower than those from three years ago, the repricing of these deposits will help reduce the bank's deposit cost rate, thereby positively impacting interest margin stability.
Yao Mingde, Vice President and Chief Financial Officer of Industrial and Commercial Bank of China, predicts that the interest margin trend in 2026 will likely resemble an "L-shaped" pattern. "We believe the short-term downward trend in net interest margin has not yet reversed, but favorable factors for improvement are continuously accumulating, and the trend of marginal stabilization is expected to continue," he analyzed.
Looking ahead to 2026, Ma Tingting, an analyst at Guotai Junan Securities, expects the decline in bank interest margins to be around 5 basis points, with downward pressure continuing to ease marginally, potentially allowing for the bottoming out and stabilization of margins at some banks. Analysts Liu Chengxiang and Zhu Xiaoyun from Kaiyuan Securities forecast a slight narrowing of the net interest margin for listed banks by 4 basis points in 2026, with the pressure concentrated in the first half of the year.
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