Profitability pressure grows for China’s state banks amid low rates, poor loan demand

All six state banks, including ICBC and China Construction Bank, report lower margins alongside small reductions in bad loans

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Published: 7:23pm, 29 Aug 2025Updated: 9:01pm, 29 Aug 2025

China’s top banks face continued pressure, as a slowing economy, lower interest rates and weak loan demand weighed on first-half earnings.

Net profit at Industrial and Commercial Bank of China (ICBC), the world’s largest bank by assets, fell 1.4 per cent in the first half from a year earlier to 168.1 billion yuan (US$23.5 billion), according to its interim results announced on Friday after the market closed.

Its net interest margin (NIM), a key indicator of a bank’s profitability, fell to 1.3 per cent from 1.42 per cent at the end of last year, slipping even further from the 1.8 per cent threshold widely regarded as necessary to maintain reasonable profitability. Its non-performing loan (NPL) ratio improved to 1.33 per cent, from 1.34 per cent at the end of last year.

The other state banks, which also announced their first-half earnings on Friday, all reported lower NIMs and lower levels of bad debt as a result of strong government support.

China Construction Bank’s net profit fell 1.4 per cent to 162 billion yuan from a year earlier. Its NPL ratio fell to 1.33 per cent from 1.34 per cent, while its NIM declined to 1.4 per cent from 1.51 per cent last year.

Bank of China’s net profit fell 0.85 per cent from a year earlier to 117.6 billion yuan. Its NIM fell slightly to 1.26 per cent from 1.27 per cent at the end of last year.

The Agricultural Bank of China, the country’s second-biggest lender, posted a 2.7 per cent increase in net profit to 139.5 billion yuan, compared with a year ago. Its NIM fell to 1.32 per cent from 1.42 per cent last year, and its NPL ratio narrowed to 1.28 per cent from 1.3 per cent.

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Profitability pressure grows for China’s state banks amid low rates, poor loan demand

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}All six state banks, including ICBC and China Construction Bank, report lower margins alongside small reductions in bad loans

All six state banks, including ICBC and China Construction Bank, report lower margins alongside small reductions in bad loans