At ICBC's 2025 results announcement on March 27, Vice President Yao Mingde addressed market concerns regarding net interest margins. Regarding loan pricing trends, Yao projected that loan yields would continue their downward trend in 2026, but the rate of decline would narrow significantly. Current data shows that interest rates for newly issued corporate loans, individual housing loans, and personal business loans at ICBC have already begun to stabilize. For the first two months of this year, the interest rate for newly issued loans decreased by 2 basis points year-on-year, which is 18 basis points less than the decline seen in the same period last year.
Yao Mingde pointed out that the fundamental assessment is that net interest margins in 2026 will most likely follow an "L-shaped" trajectory. ICBC's net interest margin for 2025 stood at 1.28%, a decline of 14 basis points from 2024. However, the downward trend has been narrowing progressively, with the year-on-year decrease shrinking by 5 basis points. "Barring any further significant adjustments to deposit listing rates, we anticipate that the bank's net interest income will turn positive year-on-year this year, marking an inflection point. The decline in net interest margin is also expected to narrow further compared to 2025."
Several factors contribute to this outlook. First, the management of the asset-liability portfolio has become more adaptive to monetary policy adjustments. In 2025, ICBC diligently implemented a package of monetary and financial policies, appropriately increased the interest rate sensitivity of its balance sheet, and optimized its asset-liability mix to hedge against interest rate downward pressure, thereby stabilizing the net interest margin level.
Second, liability management has placed greater emphasis on cost reduction and efficiency gains. On one hand, the bank maintains a diversified liability structure and promotes refined cost control. Leveraging its solid foundation and strong service capabilities in areas like custody, settlement, and depository services, it has effectively attracted the accumulation of various low-cost funds. On the other hand, by strictly adhering to interest rate adjustment safeguard clauses and interbank self-regulation initiatives, deposit growth has consistently maintained a favorable balance between volume and price. As high-cost time deposits gradually mature, the impact of previous adjustments to deposit listing rates has been progressively absorbed. Furthermore, the repricing of loans is nearing its end, suggesting that interest spreads are expected to stabilize.
Third, the allocation of major asset classes has focused more on long-term reserves. ICBC has fully utilized its role as a leading bank in supporting national strategies and stabilizing the broader economy, balancing scale with效益 (benefits), and structure with volume. This resulted in a 5.7% growth in customer loans and a 19.6% growth in bond investments.
"In the short term, the economic differential for overseas institutions will continue to narrow, while their contribution to serving national strategies and enhancing the group's comprehensive value is becoming increasingly prominent. Considering all these factors, we believe the short-term downward trend in net interest margins has not yet reversed. However, favorable factors driving the improvement of net asset performance are continuously accumulating, and the trend of marginal stabilization is expected to continue. In the next phase, we will persistently optimize the allocation of major asset classes, scientifically arrange credit supply, strengthen refined cost control, and keep the fluctuation of net interest margins within a reasonable range," Yao Mingde concluded.
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