Revenue and profit growth remain in positive territory for China Citic Bank in the first half of 2026, with net interest income growth accelerating quarter by quarter. The bank increased its provision allocations, ensuring steady profit growth while reinforcing its provision buffer. In 1H26, CITIC Bank's revenue grew 2.31% year-on-year (compared to 4.49% in 1Q26), PPOP rose 5.43% year-on-year (versus 6.38% in 1Q26), and net profit attributable to shareholders increased 3.08% year-on-year (versus 3.02% in 1Q26). On a single-quarter basis, 2Q26 revenue grew 0.22%, PPOP rose 4.51%, and net profit attributable to shareholders increased 3.15%. Operating and administrative expenses fell 2.12% year-on-year in 1H26, with the cost-to-income ratio at 25.46%, down 1.35 percentage points year-on-year. Credit and other asset impairment losses rose 13.11% year-on-year, with loan impairment losses up 21.50%, reflecting significantly increased provisioning efforts. Net non-operating income stood at RMB 1.075 billion, compared to RMB 22 million in the same period last year, primarily driven by a one-time gain of RMB 1.086 billion from equity investment in an associate. Excluding non-recurring items, net profit attributable to shareholders declined 0.6% year-on-year. Additionally, the bank declared an interim dividend totaling RMB 11.296 billion, representing 30.04% of the mid-year consolidated net profit attributable to the bank's shareholders and 32.09% of net profit attributable to ordinary shareholders. The annualized weighted average ROE for 1H26 was 9.61%, down 0.16 percentage points year-on-year.
Net interest income in 1H26 rose 2.74% year-on-year (versus 1.66% in 1Q26), with growth picking up steadily each quarter. On a single-quarter basis, the annualized net interest margin for 2Q26 increased 1 basis point quarter-on-quarter to 1.58%, with the year-on-year decline narrowing to just 1 basis point. The annualized yield on interest-earning assets fell 5 basis points quarter-on-quarter to 2.86%, while the cost of interest-bearing liabilities dropped 7 basis points quarter-on-quarter to 1.30%. The faster decline in liability-side costs relative to asset-side yields continues to support margin stabilization. On a disclosed basis, the net interest margin for 1H26 was 1.62% on daily average, down only 1 basis point year-on-year (compared to a 14-basis-point decline for full-year 2025). The yield on interest-earning assets was 2.97%, down 36 basis points year-on-year, while the cost of interest-bearing liabilities was 1.37%, also down 36 basis points. The deposit cost rate fell sharply by 41 basis points year-on-year to 1.24%, as the benefits of deposit rate repricing and liability cost management continue to be released.
On the asset side, corporate lending maintained rapid growth with manufacturing leading the pack, while retail loans and bills were reduced. Interest-earning assets grew 5.47% year-on-year in 1H26 (versus 4.06% in 1Q26), with loans up 3.56% year-on-year (versus 2.28% in 1Q26). Corporate loans rose 8.75%, retail loans declined 0.86% year-on-year (versus -0.16% in 1Q26), and bills fell 24.54%. Loans grew 2.50% from the start of the year, with corporate loans (excluding discounts) up 6.52%, retail loans down 1.53%, and bills down 15.82%, meaning virtually all incremental lending came from corporate clients. In 2Q26 alone, new loans totaled RMB 9.14 billion, comprising RMB 1.35 billion in corporate loans, RMB 19.74 billion in bills, and a reduction of RMB 11.95 billion in retail loans. In terms of corporate industry allocation, manufacturing loans increased RMB 92.84 billion from the start of the year, ranking first in incremental growth among all sectors, with the share of corporate loans rising to 22.27% (up 1.37 percentage points from the beginning of the year). Water conservancy and environment (+RMB 27.43 billion) and information transmission (+RMB 21.33 billion) also saw notable increases. Real estate loan balances declined RMB 19.23 billion from the start of the year, with their share of corporate loans falling to 7.93% (down 1.10 percentage points). In retail sub-segments, mortgages grew 1.7% year-on-year and operating loans rose 0.5%, remaining relatively stable. Credit card loans fell 1.2% and consumer loans declined 13.7% year-on-year, continuing to contract as retail lending remains cautious overall.
On the liability side, deposit growth stabilized, corporate demand deposits turned positive, and the trend toward time deposits moderated. Interest-bearing liabilities grew 5.55% year-on-year in 1H26 (versus 4.15% in 1Q26), with deposits rising 3.81% from the start of the year (up 2.83% year-on-year, versus 2.65% in 1Q26). Corporate deposits increased 3.87% from the beginning of the year, while retail deposits grew 3.66%. Bond issuance declined 20.87% year-on-year, while interbank liabilities surged 46.41%, reflecting a shift in the active liability structure toward interbank funding to replace some bond issuance. The average cost of interbank deposits and borrowings was 1.44% in 1H26, lower than the 1.81% cost of issued debt instruments. In terms of maturity structure, corporate demand deposits grew 1.15% year-on-year, turning positive (versus -3.08% in 1H25), while retail demand deposits rose 2.68%. Corporate time deposits grew 7.24% and retail time deposits rose 5.00% year-on-year, continuing the trend toward time deposits but at a notably slower pace compared to 1H25, when corporate time deposits grew 24.53%. Demand deposits accounted for 40.7% of total deposits, broadly flat from 40.6% at the start of the year.
Net non-interest income in 1H26 rose 1.43% year-on-year (versus 10.75% in 1Q26), with some pullback in the second quarter. Net fee income grew 1.92% year-on-year in 1H26 (versus 6.99% in 1Q26 and 5.58% in 2025). On a disclosed basis, net fee and commission income rose 2.41% year-on-year, driven primarily by agency business fees, which surged 31.66% as wealth management distribution momentum continued. Non-money-market fund assets under custody reached RMB 157.361 billion, up 22.92% from the start of the year, while "fixed income plus" wealth management product balances grew 105.48% from the beginning of the year. Long-term protection-type insurance products accounted for 83.83% of sales, up 19.70 percentage points year-on-year. Custody and other fiduciary fees grew 5.76% year-on-year. Bank card fees (-7.83%), guarantee and advisory fees (-11.23%), settlement and clearing fees (-8.67%), and wealth management fees (-5.94%) continued to drag on overall fee income. Net other non-interest income grew 0.96% year-on-year in 1H26 (versus 14.89% in 1Q26), with investment income and fair value changes totaling RMB 16.089 billion, up 4.26% year-on-year, though growth slowed in 2Q26 amid bond market volatility. In retail and private banking, private banking clients reached 104,900 households, up 8.58% from the start of the year, with average monthly daily AUM of RMB 1.49 trillion, up 9.36%. CIB Wealth Management's assets under management reached RMB 2.49 trillion, up 8.63% from the beginning of the year.
Asset quality remained broadly stable, with the NPL ratio flat and the provision coverage ratio rebounding quarter-on-quarter, though overdue and special-mention loan metrics ticked upward. The NPL ratio stood at 1.15%, flat both quarter-on-quarter and from the start of the year (down 1 basis point year-on-year). The annualized net NPL formation ratio for 1H26 was 1.11%, broadly unchanged year-on-year (up 1 basis point). Looking at forward-looking indicators, special-mention loans accounted for 1.68% of total loans, up 4 basis points quarter-on-quarter and 5 basis points from the start of the year. The overdue ratio rose to 1.63%, up 21 basis points from the beginning of the year, while loans overdue more than 90 days accounted for 1.02%, up 16 basis points. The overdue-to-NPL ratio climbed to 142.3%, and the over-90-days-overdue-to-NPL ratio rose to 88.6%, indicating a narrowing buffer in NPL classification, though all loans overdue more than 90 days remain classified as NPLs. The provision coverage ratio was 203.12%, up 0.67 percentage points quarter-on-quarter (down 0.49 percentage points from the start of the year), with the provision-to-loan ratio at 2.33%, up 1 basis point quarter-on-quarter. The annualized credit cost for 1H26 was 1.05%, up 16 basis points year-on-year, with loan impairment provisions increasing 21.50% year-on-year, strengthening the provision buffer alongside steady profit growth.
In terms of asset quality by business line, corporate NPL ratios declined modestly, retail remained broadly stable, and consumer loans were the primary pressure point. As of the end of June 2026, the corporate NPL ratio was 1.08% (down 1 basis point from the start of the year), with improvements across major industries including manufacturing at 1.03% (down 1 basis point), leasing and business services at 0.65% (down 27 basis points), water conservancy and environment at 0.20% (down 2 basis points), and power at 0.52% (down 5 basis points). However, NPL ratios rose in real estate to 3.29% (up 62 basis points), wholesale and retail to 2.58% (up 29 basis points), and construction to 1.33% (up 8 basis points). Corporate NPLs remain concentrated in real estate, manufacturing, and wholesale and retail, which together account for 64.35% of total corporate NPLs. The bank continued to reduce its real estate exposure, with corporate real estate financing balances subject to credit risk declining RMB 27.385 billion from the start of the year to RMB 353.14 billion. The retail NPL ratio was 1.33%, up 1 basis point from the start of the year. Mortgages stood at 0.42% (up 2 basis points), operating loans at 1.29% (down 18 basis points, showing notable improvement), credit cards at 2.57% (down 5 basis points), and consumer loans at 3.31% (up 65 basis points from the start of the year, with balances down 11.7%). Consumer credit remains the core source of retail risk.
Investment recommendation: The bank is valued at 0.62X/0.58X/0.54X PB and 6.58X/6.35X/6.11X PE for 2026E, 2027E, and 2028E, respectively. CITIC Bank delivered positive revenue and profit growth in 1H26, with net interest income growth accelerating quarter by quarter and the net interest margin showing signs of stabilization. Asset quality remained broadly stable with the provision coverage ratio rebounding quarter-on-quarter, and the interim dividend payout ratio was raised to over 30%, further strengthening its dividend appeal. The bank's solid foundation in corporate strategic and institutional clients, distinctive retail customer base, and continued deepening of synergies leveraging the CITIC Group's integrated "financial plus industrial" advantages warrant attention. Investors are advised to monitor the implementation of the "five leadership" initiatives in wealth management, comprehensive financing, transaction settlement, foreign exchange services, and digitalization. The "Accumulate" rating is maintained. Risk warnings: economic downturn exceeding expectations, company underperformance, and delayed research report updates.
Disclaimer: This article is for reference only and does not constitute investment advice.
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