Postal Savings Bank Of China Co.,Ltd. (PSBC) has released its interim results for the first half of 2026, showcasing sustained improvement in net profit attributable to shareholders. During 1H26, the bank recorded operating revenue of RMB 192.5 billion and net profit attributable to the parent of RMB 51.5 billion, representing year-on-year growth of 7.3% and 4.6% respectively, with the growth momentum of net profit attributable to the parent maintaining its recovery trend. Notably, net fee and commission income surged 12.2% year-on-year, supported by the rebound in wealth management and investment banking businesses alongside disciplined expense management. This growth rate, however, moderated by 3.9 percentage points compared to the full-year 2025 level.
The bank's balance sheet expansion remained robust as of the end of 1H26, with total assets reaching RMB 19.8 trillion, up 8.9% year-on-year. Loan and deposit growth came in at 7.9% and 8.3% respectively, while risk-weighted assets expanded 10.7% year-on-year. The core Tier-1 capital adequacy ratio stood at a solid 10.04%. In a move to enhance shareholder returns, the bank proposed an interim dividend of RMB 1.33 per 10 shares (pre-tax), lifting the payout ratio to 31%, thereby underscoring its commitment to maintaining stable shareholder value.
Asset quality metrics remained broadly stable during the period. The non-performing loan ratio and special-mention ratio stood at 1% and 1.73% respectively as of 1H26 end, edging up 1 basis point and 5 basis points quarter-on-quarter sequentially. The provision coverage ratio settled at 215%, reflecting a modest 1.7 percentage point decline from the prior quarter, yet the bank's risk-absorption capacity remains more than adequate. Impairment losses on credit assets surged 65.9% year-on-year in 1H26, translating into an estimated credit cost ratio of 0.74%, indicating that the bank continues to adopt a prudent approach to provisioning.
On the margin front, the bank reported a net interest margin of 1.63% for 1H26, contracting 7 basis points year-on-year and 2 basis points quarter-on-quarter. Encouragingly, the deposit cost rate declined 25 basis points year-on-year to 0.98%, pulling the overall interest-bearing liability cost down to 1.01%, a reduction of 25 basis points from the prior-year period.
Looking ahead, Postal Savings Bank Of China Co.,Ltd. is focused on optimizing its revenue mix by reinforcing its core deposit and lending franchise, strengthening its "first growth curve" anchored in net interest margin performance, while aggressively expanding wealth management, payment settlement, investment banking, transaction banking, and financial markets operations to cultivate a "second growth curve" driven by non-interest income. The bank maintains its existing earnings projections, forecasting revenue growth of 2.5%, 4.39%, and 4.28% for 2026 through 2028 respectively. Based on the latest closing price, the corresponding price-to-book valuations for 2026-2028 are 0.58 times, 0.54 times, and 0.51 times, supporting the maintained "Overweight" rating.
Key risk factors include the banking sector's significant sensitivity to macroeconomic conditions, monetary policy shifts, and regulatory changes, any of which could materially impact operational performance. Fluctuations in net interest margins and shifts in asset quality expectations represent particularly important variables to monitor.
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