--- title: "Morgan Stanley: The next quarter's fee income from domestic banks supports the rebound in revenue and profit, with potential for accelerated profit growth for Minsheng Bank and CITIC Bank" type: "News" locale: "en" url: "https://longbridge.com/en/news/255444864.md" description: "Morgan Stanley's report indicates that the commission income of mainland banks in the second quarter supports revenue and profit growth, with Bank of Ningbo, HZBANK, and Bank of Chengdu demonstrating good investment value. CMBC, CITIC BANK, SPD Bank, and Industrial Bank have the potential for accelerated profit growth. Despite pressure on net interest income, the reduction in funding costs and stable asset growth make banks' net interest income more stable. Service fee income has significantly rebounded, especially for state-owned enterprise banks, and it is expected that net interest margin pressure will further ease in the future" datetime: "2025-09-01T09:43:46.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/255444864.md) - [en](https://longbridge.com/en/news/255444864.md) - [zh-HK](https://longbridge.com/zh-HK/news/255444864.md) --- # Morgan Stanley: The next quarter's fee income from domestic banks supports the rebound in revenue and profit, with potential for accelerated profit growth for Minsheng Bank and CITIC Bank Morgan Stanley published a report stating that the fee income of mainland banks in the second quarter supports the rebound in revenue and profit growth. With the overall industry experiencing a rebound in revenue and profit growth, it sees good investment value in Bank of Ningbo (002142.SZ), HZBANK (600926.SH), and Bank of Chengdu (601838.SH). These regional banks should continue to demonstrate revenue and profit growth that outpaces their peers. The bank also sees further acceleration potential in profit growth for CMBC (01988.HK), CITIC BANK (00998.HK), SPD Bank (600000.SH), and Industrial Bank (601166.SH). The bank indicated that the pressure on net interest income for domestic banks is easing alongside the alleviation of net interest margin pressure: The reduction in the Loan Prime Rate (LPR) in May and the ongoing decline in loan rates continue to compress asset yields, but more domestic banks are showing more stable net interest income under lower funding costs and robust asset growth. State-owned enterprise banks face greater net interest margin pressure than medium-sized banks, partly due to significant growth in both loans and bond investments, but the yield on newly added earning assets is lower. Bank of China (03988.HK), Industrial Bank, and Ping An Bank (000001.SZ) experienced more net interest income pressure in the second quarter of 2025. Thanks to the reduction in funding costs, banks generally expect net interest margin pressure to further ease in the future. Loan growth is expected to further slow, and the deceleration in bond investment growth will help stabilize asset yields. Service fee income has significantly rebounded, especially in state-owned enterprise banks, with increased investment income supporting revenue and pre-tax profit growth: The recovery in capital market activities, lower deposit rates, and more stable service fee rates have driven a strong rebound in service fee income. Notably, the service fee income of China Construction Bank (00939.HK), Bank of China, Postal Savings Bank (01658.HK), and Agricultural Bank (01288.HK) grew by 19%, 19%, 16%, and 32% year-on-year, respectively. However, the service fee income of China Merchants Bank (03968.HK), Industrial and Commercial Bank (01398.HK), and Industrial Bank was dragged down by a decline in credit card-related fees, although wealth management-related service fee income grew healthily. It is expected that banks with high growth in retail asset management scale (AUM) will see service fee income further rebound in the coming quarters. Overall credit quality remains stable: In the first half of 2025, the average annual non-performing loan formation rate for covered banks decreased by 1.8 basis points to 0.89% (annualized). China Construction Bank (-14 basis points), CITIC BANK (-13 basis points), China Everbright Bank (06818.HK) (-30 basis points), and Bank of Ningbo (-28 basis points) saw more significant quarter-on-quarter declines; while Bank of China and Postal Savings Bank experienced year-on-year increases of 14 basis points (affected by real estate loans) and 18 basis points (affected by operational loans), respectively Morgan Stanley pointed out that the six major state-owned banks in mainland China and some joint-stock banks announced their interim dividend distributions, including MINSHENG BANK, CITIC BANK, Ping An Bank, and China Everbright Bank. The growth of risk-weighted assets (RWA) for most banks has slowed, and credit growth is relatively slow. Among all the banks covered by the firm, China Merchants Bank and HZBANK showed rapid quarterly growth. Due to capital injections, the capital adequacy ratios of China Construction Bank, Bank of China, Bank of Communications, and Postal Savings Bank increased quarter-on-quarter. The strong profit growth of Bank of Ningbo and HZBANK supports their core Tier 1 capital adequacy ratios, while the rapid growth of risk-weighted assets at China Merchants Bank puts pressure on its capital adequacy ratio ### Related Stocks - [600000.CN](https://longbridge.com/en/quote/600000.CN.md) - [600016.CN](https://longbridge.com/en/quote/600016.CN.md) - [01988.HK](https://longbridge.com/en/quote/01988.HK.md) - [601838.CN](https://longbridge.com/en/quote/601838.CN.md) - [601998.CN](https://longbridge.com/en/quote/601998.CN.md) - [00998.HK](https://longbridge.com/en/quote/00998.HK.md) - [600926.CN](https://longbridge.com/en/quote/600926.CN.md) - [002142.CN](https://longbridge.com/en/quote/002142.CN.md) ## Related News & Research - [May 2026 savings choice: CDs lock rates, HYSAs offer access](https://longbridge.com/en/news/286628983.md) - [Mortgage applications climb despite steady high rates](https://longbridge.com/en/news/286619260.md) - [ZAWYA: Sohar International recognized as Best Bank in Oman and Best Digital Bank of the Year awards](https://longbridge.com/en/news/286903125.md) - [Reliance step-down unit Roptonal enters voluntary liquidation in Cyprus](https://longbridge.com/en/news/287077091.md) - [Palm Launches The Onboard Suite: Real-Time Access to 125 Million Businesses Across 150,000 Jurisdictions](https://longbridge.com/en/news/287063783.md)