At Ping An Bank Co., Ltd.'s 2025 annual results briefing, which attracted over 210,000 viewers, a complex mix of caution and anticipation was palpable. Following a two-and-a-half-year strategic transformation, President Ji Guangheng set the tone in his opening remarks, stating the bank had "seen the light at the end of the tunnel." As it embarks on the initial phase of the 15th Five-Year Plan period, this financial institution, once known for its robust growth, is striving to demonstrate its operational resilience through economic cycles to the capital markets. Management explicitly identified 2026 as a pivotal year for the reform and transformation to yield results and introduced the operational goal of "returning to growth."
However, the financial details under the spotlight still reflected the challenges of deep-seated transformation. Influenced by factors including market interest rate changes and business structure adjustments, Ping An Bank reported revenue of 131.442 billion yuan for 2025, a decrease of 10.4% year-on-year, and net profit attributable to shareholders of 42.633 billion yuan, down 4.2% year-on-year. This marks the second consecutive year of declining revenue and net profit, following the trend in 2024. While management announced that the reduction of high-risk assets is nearing completion, market scrutiny of the financials intensifies: as the previous excess net interest margin gradually diminishes with the macro cycle and the old high-yield business model disintegrates, how will this joint-stock commercial bank fill the substantial revenue gap and deliver on its strategic promise of "returning to growth"?
**Stemming the Bleed** Management acknowledged that in recent years, Ping An Bank has been proactively digesting high-risk assets and decisively exiting high-risk customer segments. This painful "surgical removal" of assets is now largely complete. A deep analysis of the balance sheet reveals a significant internal shift in asset structure. The primary battleground of this restructuring has been the retail business, specifically the credit card segment. Once a major profit driver but frequently pressured by economic cycles, credit card operations have been aggressively scaled back. By the end of 2025, the credit card receivables balance had decreased to 405.442 billion yuan, a contraction of 6.8% from the end of the previous year. Concurrently, to stabilize the core retail asset base, low-risk residential mortgage loans expanded against the trend, with the balance reaching 355.148 billion yuan, an increase of 8.9%. Newly issued loans for personal new energy vehicles surged to 72.626 billion yuan, a significant year-on-year increase of 13.9%.
This defensive strategy of actively lowering risk appetite has yielded direct improvements in asset quality. By the end of 2025, the non-performing loan (NPL) ratio for personal loans at Ping An Bank dropped significantly to 1.23% from 1.39% at the end of the previous year. Notably, the NPL ratio for the previously high-risk credit card business fell substantially by 0.53 percentage points from its 2024 peak to 2.24%. The NPL ratio for the stabilizing mortgage business improved further to 0.25%. The improvement in these core risk control metrics validates management's success in de-risking the asset side. This positive trend in asset quality has also created subtle ripple effects deeper within the income statement. In 2025, the retail financial business recorded a net profit of 2.683 billion yuan, a remarkable recovery on paper compared to the meager 289 million yuan in 2024.
A closer examination reveals that this profit recovery did not stem from a substantive revival of front-end revenue generation capability. Revenue from the retail business remained under severe pressure in 2025, plunging 13.5% year-on-year to 61.626 billion yuan, and its contribution to the bank's total revenue declined by 1.7 percentage points to 46.9%. The mechanism behind this "revenue decrease but profit increase" phenomenon lies primarily in the bank's provision adjustment within its financial system. From a bank-wide perspective, thanks to the accelerated disposal of high-risk assets in prior periods, the overall NPL formation rate decreased by 0.17 percentage points year-on-year. The stabilization of asset quality objectively reduced the burden of making large additional provisions. Specifically for the retail segment, the bank recognized credit and other asset impairment losses of 37.576 billion yuan in 2025, a sharp decrease of 22.9% from 48.729 billion yuan in 2024. This means the retail segment set aside over 11.1 billion yuan less in impairment losses in 2025. It is this significantly reduced provision expense that directly "fed back" into and supported the recovery in net profit on the books.
However, the consumption of provisions in the retail segment remains at a very high level. Although the proportion of total bank provisions consumed by the retail segment decreased slightly from 98.6% last year to 92.6% in 2025, it still accounts for the overwhelming majority of the bank's provisions. This indicates that non-performing retail assets continue to consume resources heavily. Viewed optimistically, it also suggests that once the quality of the underlying retail assets is firmly established in the future, allowing for a further reduction in the provision coverage ratio, Ping An Bank still possesses considerable potential for provisions to feed back into profits.
**Loss of Momentum** If provisions act as a cushion for profits, then the net interest margin (NIM) is the core moat for commercial bank profitability, and this represents Ping An Bank's most severe current challenge. Over a longer timeline, the bank's full-year NIM has declined steadily from a high of 2.79% in 2021 to 1.78% in 2025. This 101-basis-point collapse stems not only from common macro-environmental factors and LPR repricing but also from a fundamental shift in the bank's micro-level strategy. Historically, Ping An Bank and China Merchants Bank were known as leaders in NIM among joint-stock banks. Unlike CMBC's reliance on a moat of low-cost liabilities, Ping An Bank, during its 2016 retail transformation, ventured down a riskier path of boosting NIM through high pricing on the asset side. However, the model of high pricing covering high risks inevitably backfires during economic downturns. As credit card and consumer loan NPL ratios climbed to 2.77% and 1.23% respectively in 2023, the underlying asset risks accelerated. The current sharp NIM decline represents a painful correction from past aggressive expansion.
To maintain risk control boundaries, Ping An Bank began shifting credit resources towards safer, medium-to-low-yield assets. This sustained defensive posture led to the average yield on loans issued dropping to 3.87% in 2025, a significant contraction of 67 basis points year-on-year. The rapid decline in asset-side yields urgently needs to be offset by a reduction in liability-side costs. Although Ping An Bank actively optimized its structure, reducing the personal deposit interest payment rate by 34 basis points to 1.82% in 2025, it faces a challenging growth bottleneck in its core base of low-cost funds. The total personal deposit balance remained essentially flat at 1.28 trillion yuan by the end of 2025. This indicates that after moving away from a price-war strategy for deposits, the accumulation of retail funds has entered a plateau. On one side, asset yields are plummeting; on the other, liability costs remain relatively rigid. The intense friction between these two forces has not only erased the previous NIM advantage but also forms the fundamental reason for the bank's double-digit revenue decline.
Parallel to the pressure on traditional NIM-based business, fee-based income has also experienced a phase of decline. Amid industry-wide NIM compression, the "big wealth management" strategy was once seen as key to boosting non-interest income and smoothing cyclical volatility. However, the bank's net fee and commission income has gradually declined from a peak of 33.062 billion yuan in 2021 to 23.894 billion yuan in 2025. While, leveraging Ping An Insurance (Group)'s integrated financial ecosystem, revenue from agency sales of personal insurance achieved significant growth of 53.3% to 1.292 billion yuan in 2025, this partial increase is insufficient to fully offset the overall decline in other wealth management segments like fund and wealth management product agency businesses. This not only reflects the difficulties of wealth management transformation but also indicates that deep cultivation of distribution capabilities, investment research infrastructure, and client trust requires a long period of weathering market cycles.
Facing the衰退 of traditional profit engines, management hinted at new strategic focuses during the briefing. After decisively retreating from high-risk, high-return products, Ping An Bank is attempting to build new asset positions. Products characterized as "medium-risk, medium-return," represented by offerings like Orange E-Loan and Orange Business Loan, have already surpassed 300 billion yuan in scale, with good asset quality performance. This signals the bank's effort to find a more stable middle ground on the risk-return spectrum. However, from a scale perspective, this new 300-billion-yuan portfolio remains minuscule within the total personal loan book of 1.72 trillion yuan. Previously, the bank's profit system heavily relied on the massive scale effect of high-yield credit assets. In the short term, these medium-return products face immense scaling pressure to quickly fill the vast revenue void left by the large-scale contraction of the old high-interest assets.
**The Growth Trajectory** Despite the significant gap in momentum between old and new drivers, "returning to growth" was a frequently used phrase by management. President Ji Guangheng confidently told the market that "the most difficult period has passed." In the current banking winter of overall revenue pressure, management's confidence in stabilization and reversal is not merely optimism but is backed by a detailed financial and business rationale.
The primary logical support for management's positive 2026 outlook is the clearance of "drag factors." As the reduction of high-risk retail assets approaches its end, the severe "bloodletting" effect of active balance sheet contraction on revenue is expected to cease abruptly in 2026. Coupled with the continued reduction in retail credit impairment losses, two consecutive years of declining performance have objectively created a very low financial base. Future growth, even from modest marginal improvements, could translate into positive growth on the financial statements, provided the pace of scale expansion remains steady.
Secondly, there is an expectation of NIM repair driven by lower liability-side costs. Although total customer deposits increased only slightly by 1.4% compared to the end of the previous year, Ping An Bank's average deposit interest payment rate decreased significantly by 42 basis points year-on-year in 2025, ranking among the top reductions for joint-stock banks. This is expected to support NIM recovery and revenue stabilization.
A more fundamental strategic support comes from the strong compensatory role of corporate banking and the "public-to-private linkage" strategy. To address the pain of transitioning between old and new drivers, management's proposed solution is to leverage its over-two-decade expertise in supply chain finance, utilizing public-private linkage to deeply penetrate corporate clients across industry chains. Financial data confirms the accelerated implementation of this strategy: in 2025, general corporate loans at Ping An Bank grew by 9.2%, and the number of corporate clients increased significantly by 13.2% against the trend. With a full-year supply chain financing volume as high as 1.96 trillion yuan, Ping An Bank is converting this deep-seated strength into a "door opener" for mass customer acquisition. The core strategy involves precisely targeting corporate clients from real transaction scenarios, then feeding back to the retail (C-end) side through business loops like payroll services and wealth management, attempting to re-establish a positive cycle balancing volume, pricing, and risk.
However, beneath this optimistic growth narrative, Ping An Bank's balance sheet still harbors several real variables requiring cautious handling. First is the pressure from the migration of underlying credit assets. Although the bank-wide NPL ratio statically remained at a safe 1.05% at the end of 2025, a leading indicator sounded an alarm. The migration rate of "special mention" loans reached 48.25% in 2025, meaning nearly half of these watch-list loans deteriorated. This suggests that the repayment capacity of both corporates and individuals remains fragile during the transition of economic drivers.
Secondly, the corporate banking segment, acting as the "covering force," faces its own cyclical tests. During the painful retail transformation, corporate banking grew rapidly, supporting the overall bank. However, affected by industry cycle adjustments, the corporate loan NPL ratio rose to 0.87% in 2025, with the NPL ratio for corporate real estate loans surging 0.43 percentage points to 2.22%. The strategic vision of public-private linkage must be built on a foundation of stable asset quality, placing extreme demands on the bank's risk control capabilities.
Thirdly, future profit adjustment flexibility may be constrained. During the two-year period of revenue pressure, Ping An Bank smoothed profit volatility by "recognizing fewer impairment losses," at the cost of the provision coverage ratio dropping nearly 30 percentage points to 220.88% by the end of 2025. Objectively, this aligns with operational logic during a risk-clearance phase, but the thinning of the safety cushion is an undeniable fact. If credit demand recovery in 2026 falls short of expectations and revenue fails to improve substantively, the bank will have limited room for further "financial engineering" through provision adjustments, and the income statement will face a true test of underlying performance.
In summary, based on financial logic, it is highly probable that Ping An Bank will achieve a "moderate numerical recovery" in its 2026 financial statements, benefiting from the very low base effect, significantly reduced interest payment costs, and a streamlined balance sheet. Management's optimism has a realistic financial foundation. However, this merely represents stepping out of the ICU. The true long-term challenge for Ping An Bank is this: with the era of ultra-high NIMs firmly in the past, the old engine dismantled, and new drivers still in their infancy, this former dark horse of the retail banking race must, in a more competitive and flatter industry new normal, prove that it possesses not only the ability for painful restructuring but also a robust gene for sophisticated, self-sustaining profitability.
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