Lenders move toward high-quality growth

Early earnings indicators from China's banking sector point to a structural shift.

Preliminary 2025 results from 11 A-share listed banks show most lenders delivering simultaneous revenue and profit growth, reinforcing evidence that the industry is moving beyond pure balance-sheet expansion toward higher-quality development.

In serving the real economy, Chinese banks have responded to cyclical fluctuations with strategic resolve and addressed development challenges through transformation, analysts said.

This has not only injected core momentum into the sector's steady growth, but also provided solid financial support for the real economy.

All of the 11 A-share listed banks that have released preliminary results for fiscal year 2025 recorded positive growth in net profit attributable to shareholders, with four banks even achieving double-digit growth. Bank of Qingdao, a joint-stock city commercial lender, posted the fastest growth, with net profit attributable to shareholders rising by 21.66 percent year-on-year.

Among these, 10 banks recorded year-on-year growth in operating income, with China CITIC Bank being the only exception, posting a slight decline. Bank of Nanjing led with a 10.48 percent year-on-year increase in revenue, followed by Bank of Ningbo and Bank of Qingdao, whose revenues rose by 8.01 percent and 7.97 percent, respectively.

Zheng Qingming, chief banking analyst at SWS Research, said there are several reasons why profit growth among listed banks has remained stable or even improved at the margin.

First, the narrowing decline in net interest margins has helped stabilize net interest income; second, as market sentiment has recovered and pressure from fee-rate declines has been absorbed, intermediary business income has improved; and third, a stable underlying asset-quality base has ensured that credit costs have not materially eroded profits.

Industrial Bank stated in its preliminary results announcement that it has actively integrated into and served the new development paradigm, advancing its own high-quality development while fostering new quality productive forces and supporting Chinese modernization.

Shanghai Pudong Development Bank, also known as SPD Bank, said that one of the main drivers of its economic performance growth was the effective enhancement of its capacity to serve the real economy. The bank has continuously strengthened credit allocation to key sectors, key regions and industries related to new quality productive forces, thereby promoting both qualitative improvement and reasonable quantitative growth in its credit assets.

Lou Feipeng, a researcher at the Postal Savings Bank of China, said: "At present, the long-term positive fundamentals of China's economy remain unchanged. The real economy has enormous potential and resilience, providing broad space for the development of the banking sector."

Looking ahead, Lou believes the banking industry must continue to stay true to its core mission of serving the real economy, proactively align with the economic and social development goals of the 15th Five-Year Plan period (2026-30), optimize the allocation of financial resources, and increase support for key areas and weak links.

Banks should also deepen financial innovation, improve product systems, optimize service processes, and enhance the precision and suitability of financial services, while adhering to risk bottom lines so as to mutually serve the high-quality development of both banks and the real economy, he said.

Dai Zhifeng, a banking analyst at Zhongtai Securities, said in a research note that as 2026 marks the first year of the 15th Five-Year Plan period, the front-loading of bank credit issuance will be more pronounced than last year.

Dai expects that high-quality regional banks will maintain stronger year-on-year growth in annual credit expansion. Even amid expectations of interest rate cuts, the decline in net interest margins is likely to narrow year-on-year. Supported by interest income, banks' full-year operating income and profit are expected to remain steady.