---
title: "CITIC Construction Investment | Revenue improves and performance stabilizes, selecting targets with strong fundamentals + high dividends - Overview of the banking industry 2025 annual report"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/281943254.md"
description: "CITIC Construction Investment Securities' research report points out that in 2025, listed banks will achieve slight positive growth in both revenue and profit, with the decline in interest margins continuing to narrow, and core revenue returning to positive growth territory. Credit demand remains stable, liability costs are optimized, and interest margins are expected to stabilize in the fourth quarter. Wealth management is recovering, with accelerated growth in fee income, and asset quality meets expectations. Looking ahead to 2026, revenue is expected to continue improving, and it is recommended to focus on high-quality targets with excellent fundamentals and high dividend yields. Overall, the banking industry is defensive and suitable for market risk aversion"
datetime: "2026-04-07T23:25:55.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/281943254.md)
  - [en](https://longbridge.com/en/news/281943254.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/281943254.md)
---

# CITIC Construction Investment | Revenue improves and performance stabilizes, selecting targets with strong fundamentals + high dividends - Overview of the banking industry 2025 annual report

Written by: Ma Kunpeng, Li Chen, Wang Xinyu

In 2025, listed banks are expected to achieve slight positive growth in both revenue and profit, with a favorable trend. The decline in interest margins continues to narrow + the recovery of non-interest income, leading to a return of core revenue for listed banks to positive growth. Credit demand has not shown improvement, and the growth rate remains stable. With cost optimization on the liability side, interest margins are expected to stabilize marginally in the fourth quarter. As wealth management gradually recovers, the growth of non-interest income accelerates, while other non-interest income maintains a large single-digit growth amidst fluctuations in the bond market. Asset quality meets expectations, with a month-on-month increase in the non-performing loan generation rate, ongoing exposure to risks in corporate real estate, and no turning point observed for retail and small micro risks. Looking ahead to 2026, as the decline in interest margins narrows and other non-interest income does not drag down significantly, revenue is expected to continue improving, and profits can maintain stable growth. Currently, with the actual operations and expectations of the banking industry further solidifying at the bottom, the sector has strong defensive and risk-averse attributes, primarily to hedge against the market. Within the sector, there may be frequent rotations based on short-term fundamentals and dividend yield comparisons, and it is recommended to consider high-quality targets with excellent fundamentals and solid dividend yields.

The trend of core revenue is favorable, with the banking industry maintaining slight positive growth in revenue in 2025, and the performance growth of high-quality regional city commercial banks continues to lead: In 2025, the operating income of listed banks is expected to increase by 1.4% year-on-year, an increase of 0.6 percentage points compared to 9M25, mainly due to the narrowing decline in interest margins in the fourth quarter + the gradual recovery of non-interest income + the relative stability of other non-interest income amidst fluctuations in the bond market. Among them, state-owned banks and city commercial banks are expected to grow by 2.4% and 6.0% year-on-year, while joint-stock banks are expected to decrease by 1.7% year-on-year. Specifically, net interest income is expected to decrease by 0.8% year-on-year, with the decline continuing to narrow, mainly due to stable growth in scale, benefiting from reduced costs on the deposit side, and the decline stabilizing. In terms of non-interest income, the activity in the capital market has increased, the scale of wealth management has risen, and non-interest income continues to improve marginally. With the narrowing decline in interest margins + the recovery of non-interest income, the core revenue of listed banks is expected to grow by 0.1% year-on-year in 2025, with the growth rate turning from negative to positive, and an increase of 0.7 percentage points compared to 9M25. Among them, state-owned banks and joint-stock banks are expected to change by -0.3% and 0.6% year-on-year, respectively. In the fourth quarter, bond market interest rates are expected to fluctuate narrowly, combined with a high base from the same period last year, leading to relatively stable income from gold market business in the fourth quarter. However, some banks choose to continue realizing investment income from AC accounts, combined with incremental business from precious metals, leasing, and other areas, resulting in other non-interest income maintaining large single-digit growth throughout the year.

Profits are expected to maintain stable growth, with a slight acceleration compared to 9M25. Scale expansion remains the main positive contributing factor, while the narrowing of interest margins is the main drag. In 2025, the net profit attributable to the parent company of listed banks is expected to grow by 1.6% year-on-year, with the growth rate increasing by 0.3 percentage points compared to 9M25. Among them, state-owned banks and city commercial banks are expected to grow by 1.7% and 8.2% year-on-year, while joint-stock banks are expected to decrease by 0.1% In 2025, the ROE of listed banks decreased by 0.5 percentage points year-on-year to 9.6%, showing an overall downward trend. Among them, state-owned banks, joint-stock banks, and city commercial banks decreased by 0.7 percentage points, 0.7 percentage points, and 0.2 percentage points year-on-year to 9.3%, 8.3%, and 10.8%, respectively. In terms of profit-driven breakdown, scale growth is the main positive contributing factor, contributing a net profit of 8.4%; additionally, other non-interest income, fee income, and lower provisions contributed positively to net profit by 1.2%, 0.7%, and 0.2%, respectively. On the negative contribution side, interest margin remains the main drag, contributing negatively to profit growth by 9.0%, but the degree of drag from the narrowing interest margin has slightly decreased compared to 9M25.

The speed of balance sheet expansion continues to slightly improve: effective credit demand is insufficient, and credit growth remains stable, with rapid growth in non-credit assets such as bonds. In the fourth quarter, there is a surge in bills, and some credit reserves are being shifted to be disbursed in 1Q26, with no improvement in retail credit demand: the total assets of listed banks grew by 9.1% year-on-year, an increase of 0.4 percentage points compared to 3Q25. Among them, state-owned banks and joint-stock banks grew by 10.4% and 5.2% year-on-year, respectively. With no significant recovery in credit demand, the growth rate of credit disbursement has slightly slowed down, with the asset side flexibly supplemented by bond investments and interbank assets. In 4Q25, the loan scale of listed banks grew by 6.9% year-on-year, with a quarter-on-quarter decrease of 0.4 percentage points. State-owned banks and joint-stock banks grew by 8.0% and 3.4% year-on-year, respectively. In the fourth quarter, the incremental credit mainly consisted of corporate loans and bill discounts, while retail loan demand remains weak. With the total credit disbursement in 2025 having reached the expected target, some banks choose to shift some quality projects to be disbursed in 1Q26 to smooth and alleviate the pressure of a strong start.

Deposit growth remains stable, with a marginal slowdown in the trend towards term deposits: in 2025, bank deposits grew by 7.3% year-on-year, with the growth rate remaining flat compared to 9M25. Among them, state-owned banks and joint-stock banks grew by 7.7% and 5.6% year-on-year, respectively. In 2025, the proportion of demand deposits of listed banks decreased by 0.6 percentage points compared to 1H25 to 37.6%, with the decline in the proportion of demand deposits relatively narrowing and gradually stabilizing. The proportion of demand deposits in some retail banks has begun to rebound.

The decline in interest margins continues to narrow, with some banks stabilizing their margins marginally in the fourth quarter: in 4Q25, the net interest margin (estimated value) of listed banks decreased by 3 basis points quarter-on-quarter to 1.45%, continuing to bottom out, with the net interest margin of listed banks in 2025 only slightly decreasing by 2 basis points to 1.47% compared to 9M25, and the year-on-year decline in interest margin has narrowed. Looking at individual stocks, the quarter-on-quarter changes in net interest margins of listed banks in 4Q25 showed some divergence, with ICBC, Bank of Communications, China Merchants Bank, and Chongqing Rural Commercial Bank showing some recovery, while most other banks continued to trend downward. Against the backdrop of a weak macroeconomic recovery, effective demand has not shown significant recovery, competition among peers is fierce, and asset-side interest rates remain in a downward range, with the loan yield of listed banks in 2H25 decreasing by 21 basis points compared to 1H25 to 3.40%. However, as term deposits gradually mature and are repriced, the benefits of lowering deposit listing rates continue to manifest. In 2H25, the deposit costs of listed banks decreased by 17 basis points compared to 1H25 to 1.55%, effectively supporting the interest margin Current loan interest rates have fallen to a relatively low level. With the continuous optimization of costs on the liability side and flexible management on the asset side, the decline in net interest margin for listed banks is expected to continue to narrow, with the margin decline in 2026 expected to be lower than that for the entire year of 2025.

As wealth management gradually recovers, the growth of non-interest income is accelerating. In the fourth quarter, the bond market is expected to fluctuate within a range, coupled with some banks continuing to realize investment income from AC accounts. Other non-interest income is expected to maintain a large single-digit growth: in 2025, non-interest income for listed banks is expected to grow by 7.0% year-on-year, accelerating by 0.9 percentage points compared to 9M25. Among them, net fee income is expected to grow by 5.7% year-on-year, an increase of 1.4 percentage points compared to 9M25, mainly due to increased activity in the capital market in 2025, a rebound in wealth management scale, and stable recovery of income from wealth management and other businesses from a low base. Coupled with continuous growth in settlement, clearing, and custody fees, non-interest income is showing a trend of improvement quarter by quarter. In terms of other non-interest income, under the narrow fluctuations in the bond market in the fourth quarter, financial market investment income remains stable, slightly down from the high levels of the second and third quarters. However, some banks continue to realize part of the investment income from AC accounts at the end of the year, along with growth in other non-interest income such as precious metals, leading to an annual growth of 8.2% year-on-year in other non-interest income, accelerating by 0.4 percentage points compared to 9M25.

Asset Quality Overview

The stability of asset quality is observed, with an increase in the non-performing loan generation rate on a quarter-on-quarter basis and a marginal rise in credit costs. Risks in corporate real estate continue to be cleared, with a quarter-on-quarter increase in the non-performing loan ratio. Retail and micro-enterprise risks have not shown a turning point, and the non-performing loan ratio continues to rise: in 4Q25, the overall non-performing loan ratio for listed banks is 1.24%, a quarter-on-quarter decrease of 1 basis point. The adjusted non-performing loan generation rate (estimated value) is 0.84%, a quarter-on-quarter increase of 11 basis points, and a year-on-year decrease of 1 basis point. The marginal increase in the non-performing loan generation rate is mainly due to the accelerated clearance of existing risks in corporate real estate and continued marginal deterioration in the asset quality of retail credit. In 4Q25, the overall provision coverage ratio for listed banks is 230%, a quarter-on-quarter decrease of 2 percentage points. The risk compensation capacity is relatively ample. In 4Q25, the credit cost for listed banks increased marginally by 6 basis points quarter-on-quarter to 0.71%. In key areas, the non-performing loan ratio for corporate real estate for listed banks in 2025 is expected to rise by 20 basis points to 4.37% compared to 1H25, with the increase in the non-performing loan ratio expected to be related to the debt extension risks faced by some real estate companies in the second half of the year, in line with market expectations. Risks in retail loans such as operating loans, consumer loans, and credit cards continue to be exposed, with the non-performing loan ratio for retail loans for listed banks in 2025 expected to rise by 9 basis points compared to 1H25, significantly increasing by 22 basis points year-on-year to 1.38%, which is at a high level since 2020. Currently, there is no clear trend reversal for retail risks, and it is necessary to wait for substantial improvements in economic recovery and residents' income expectations.

Annual Dividends: Currently, a total of 22 banks have announced their dividend plans for 2025, with the dividend payout ratio for the six major state-owned banks remaining unchanged at 30% (based on net profit attributable to shareholders), and China Merchants Bank's dividend payout ratio at 33.9%, continuing to lead the industry. CITIC Bank, Shanghai Pudong Development Bank, Minsheng Bank, Huaxia Bank, Wuxi Bank, and Ruifeng Bank have seen slight increases in their dividend payout ratios Outlook for 2026: The decline in interest margins is expected to narrow + the recovery of non-interest income, with revenue likely to continue improving; asset quality can remain robust, and profits are expected to achieve stable growth. 1) In terms of scale, credit demand has not shown significant recovery, but support for the real economy remains strong. It is expected that the incremental credit in 2026 will be slightly higher or basically flat, with the loan growth rate of listed banks remaining stable. 2) Currently, the expected interest rate cut in 2026 is relatively small, with the timing possibly being later, which may weaken the downward pressure on the asset side. Additionally, with cost optimization on the liability side, the decline in net interest margin is expected to be less than in 2025, estimated at only around 5-10bps. 3) The trend in wealth management is positive, and the growth rate of non-interest income is expected to continue to improve. 4) Other non-interest income faces certain high base pressure, but the extent of its drag on revenue is expected to be relatively limited. It is anticipated that the bond market in 2026 will still be dominated by volatility, and other non-interest income for banks will still have uncertainties, but currently, the pressure from the gold market business should be less than in 2025. 5) Regarding asset quality, policies such as the "Sixteen Financial Measures" to alleviate risks are continuously being extended, and under the trend of exchanging time for space, it is expected that the non-performing loan ratio and provision coverage ratio can remain stable within a reasonable range. The risks in the real estate sector continue to clear, and banks with relatively advantageous profitability may gradually increase the write-off of non-performing loans in commercial real estate in 2026. The asset quality of retail and small micro-loans is unlikely to see a turning point in the short term and may still slowly and slightly expose risks, requiring a wait for the real improvement in residents' income levels. Banks with more ample provisions can better support stable profit release.

Investment recommendation: Currently, with the actual operations and expectations of the banking industry further solidifying at the bottom, the configuration demand centered on bottom-line thinking, high confidence, and high win rates has further improved safety margins. The sector has strong defensive and hedging attributes, primarily to hedge against the market. Before an upward turning point in economic expectations is seen, it is difficult for the sector to fully switch to pro-cyclical varieties. Within the sector, there may be frequent rotations based on short-term fundamentals and dividend yield comparisons, and it is recommended to consider targets with excellent fundamentals, industry leadership, and solid dividend yields.

 

 

 

 

 

(1) The pace of economic recovery is slower than expected, weakening the debt repayment ability of enterprises. Some enterprises with poor creditworthiness may face default risks, leading to significant exposure risks for banks and a sharp decline in asset quality.

(2) Risks concentrated in key areas such as real estate and local financing platform debts pose a significant shock to bank asset quality, greatly weakening the profitability of banks.

(3) The strength of the loose credit policy is below expectations, and the rapid economic development in the regions where companies operate is unsustainable, which adversely affects the credit issuance of companies.

(4) The retail transformation effect is below expectations, and large-scale fluctuations in the equity market impact the wealth management business of companies 
Ma Kunpeng: Managing Director of the Research Institute of CITIC Securities, Deputy Director of the Research Committee, Head of the Financial Industry, Chief Analyst of the Banking Sector. With over ten years of research experience in the financial industry, he has a deep understanding and rich experience in banking research, ranking first in the Best Analyst selections by New Fortune, Crystal Ball, and others. Master's degree in Finance and Investment from Durham University, UK.

Li Chen: Master's degree in Finance from Renmin University of China, Banking Analyst. With years of sell-side research experience in the banking industry, he was a core member of the team recognized in the Best Analyst selections by New Fortune, Crystal Ball, and others from 2017 to 2022.

Wang Xinyu: Bachelor's degree in Finance from Renmin University of China, Master's degree in Science from the National University of Singapore, Banking Analyst.

Securities Research Report Title: "Revenue Improving and Performance Stabilizing, Selecting Fundamentals + High Dividend Consideration Targets—Overview of the Banking Sector 2025 Annual Report"

External Release Date: April 3, 2026

Report Issuing Institution: CITIC Securities Co., Ltd.

Analysts of this report:

Ma Kunpeng SAC No.: S1440521060001

SFC No.: BIZ759

Li Chen SAC No.: S1440521060002

SFC No.: BSJ178

Wang Xinyu SAC No.: S1440525070014

### Related Stocks

- [512730.CN](https://longbridge.com/en/quote/512730.CN.md)
- [512820.CN](https://longbridge.com/en/quote/512820.CN.md)
- [512700.CN](https://longbridge.com/en/quote/512700.CN.md)
- [512800.CN](https://longbridge.com/en/quote/512800.CN.md)
- [516210.CN](https://longbridge.com/en/quote/516210.CN.md)
- [515020.CN](https://longbridge.com/en/quote/515020.CN.md)

## Related News & Research

- [Agricultural Bank of China Raises RMB35 Billion with 2026 Tier 2 Capital Notes](https://longbridge.com/en/news/286107140.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)
- [Stocks Mixed as Crude Oil Prices and Bond Yields Fall](https://longbridge.com/en/news/286785122.md)
- [Rising Bond Yields Weigh on Stocks](https://longbridge.com/en/news/286939009.md)
- [S&P Global declares $0.97 dividend](https://longbridge.com/en/news/287005952.md)