---
title: "A Stress Test for China Merchants Bank"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/281103113.md"
description: "Continuing to hold the trump card"
datetime: "2026-03-31T01:41:06.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/281103113.md)
  - [en](https://longbridge.com/en/news/281103113.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/281103113.md)
---

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# A Stress Test for China Merchants Bank

In a macroeconomic cycle where the faith in scale has collapsed, China Merchants Bank has delivered a response of "farewell to high growth in exchange for certainty." In 2025, China Merchants Bank's revenue increased by a mere 0.01% year-on-year, and its net profit attributable to the parent company grew by 1.21%;

While it barely managed to stay above the line of positive revenue growth, its performance was hardly outstanding compared horizontally with peers—during the same period, Pudong Development Bank's net profit growth reached 10.52%, and Bohai Bank also recorded 4.61%.

However, simple superficial growth rates may not be sufficient to measure the intrinsic value of the "King of Retail";

**As an industry benchmark, China Merchants Bank's slowdown is more like a stress test report of the highest specification for the entire sector.**

The banking industry is currently caught between ice and fire: on one hand, the LPR reduction and the repricing of existing mortgage loans have forced the net interest margin defense line to retreat, while on-balance sheet credit pressure remains unabated; on the other hand, the recovery of the equity market and a new round of concentrated deposit maturities have led to another boom in the sales of wealth management products and agency funds.

With undercurrents of on-balance sheet contraction and off-balance sheet explosion, the market is particularly concerned about the true quality of this retail benchmark under macroeconomic gravity.

Deconstructing the financial report, the imprints of the cycle are deep and clear: credit demand is weak, with the proportion of current deposits historically falling below 50%; but beyond the irreversible gravity, its net interest margin rebounded quarter-on-quarter in the fourth quarter, and AUM (total retail customer assets under management) crossed the 17 trillion yuan mark against the trend, reaching 17.08 trillion yuan.

**Miao Jianmin, Chairman of China Merchants Bank, stated at the earnings call that the banking industry currently faces challenges of "low interest rates, low interest margins, and low fees," and the bank's strategy is to "strengthen advantages, address weaknesses, and maintain its advantage in wealth management."**

The management's positioning signifies that China Merchants Bank has abandoned its obsession with scale growth and is instead pursuing sustainable stability.

![Image](https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/15760e26-60d8-4608-8678-e7014082ecbf.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)

## **Interest Margin Rebounds Briefly**

The width of the net interest margin determines the thickness of a commercial bank's profitability.

There has long been a market consensus on the core barrier for China Merchants Bank's long-term maintenance of a high return on equity—it is not the high pricing on the asset side, but the low cost on the liability side.

Looking at historical data, during the expansion period of 2021-2023, China Merchants Bank's yield on interest-earning assets hovered between 3.7% and 3.9%, lagging behind Ping An Bank, the industry leader, by more than 60 basis points.

What truly created the profitability chasm was the liability-side foundation: even in 2022 and 2023, the most "competitive" years for deposit gathering, China Merchants Bank's cost rate of interest-bearing liabilities was still suppressed at 1.61% and 1.73%, far below the industry average of 2.2% to 2.4%.

The extremely low liability costs provide China Merchants Bank with two layers of moat advantage.

**The first advantage is that it eliminates management's anxiety about descending into lower-tier customer segments and chasing high-risk assets.**

This long-term restraint translates into a natural risk barrier. In 2025, China Merchants Bank's non-performing loan ratio remained at 0.94%, the best level among listed joint-stock banks, outperforming Ping An, Industrial Bank, and CITIC Bank by 11, 14, and 21 basis points, respectively.

While holding the line on asset quality, China Merchants Bank must also face the systemic "bleeding" on the asset side across the industry.

Affected by residents' early loan repayments and a more conservative consumer outlook, China Merchants Bank's credit card transaction volume declined by 7.62% year-on-year in 2025, and the yield on interest-earning assets fell to 3.04%. The average yield on core loans and advances dropped by 57 basis points to 3.34%.

However, while the industry's interest margin defense line broadly contracted due to pressure on the asset side, China Merchants Bank delivered a significant deviation from expectations.

In 2025, China Merchants Bank's net interest margin stabilized at a high level of 1.87%, maintaining a dominant lead. During the same period, Ping An Bank's net interest margin fell to 1.78%, and Industrial Bank's fell to 1.71%. In the fourth quarter, China Merchants Bank's single-quarter net interest margin recorded 1.86%, a sequential rebound of 3 basis points, and its net interest spread rebounded by 4 basis points to 1.79% quarter-on-quarter.

In the fourth quarter, as asset yields bottomed out, China Merchants Bank touched the interest margin floor earlier than its peers.

**This is due to the second advantage brought by the liability side—the structural elasticity in cost reduction.**

The massive base of low-cost core deposits allows China Merchants Bank to shed high-interest liabilities without liquidity anxiety. Under a volume-price balance strategy, the bank decisively reduced high-interest negotiated deposits and significantly cut the issuance quota for large-denomination certificates of deposit;

In 2025, the bank's average cost rate of interest-bearing liabilities was significantly reduced by 38 basis points to 1.26%. By contrast, during the same period, the liability cost rates of Ping An, Industrial, and CITIC remained at 1.67%, 1.74%, and 1.61%.

This 38-basis point reduction offset the decline in asset yields and supported the rebound in the fourth-quarter interest margin.

Peng Jiawen, Vice President and Secretary to the Board of Directors of China Merchants Bank, confirmed this achievement at the earnings call: "The decline in net interest margin for the full year narrowed significantly, and a quarter-on-quarter rebound occurred in the fourth quarter."

Looking ahead, Peng Jiawen set a clear goal: "We strive to achieve a stable interest margin in the second half of the year and continue to maintain a leading position in the industry."

Today, the macroeconomic credit winter has completely reshaped the survival rules for commercial banks: the moat is no longer "high lending returns," but "low deposit costs." The reason China Merchants Bank dares to decisively wield the scalpel on the liability side and calmly shed high-interest burdens is its confidence in the massive settlement funds deposited by its vast retail customer base.

However, if it does not rely on high interest rates as bait, what exactly allows China Merchants Bank to continuously attract such a huge volume of cheap funds?

The answer lies in the true "killer app" of China Merchants Bank's business.

## **Holding the Retail Trump Card**

China Merchants Bank's trump card for navigating the cycle is hidden in its off-balance sheet wealth management landscape.

A striking divergent data point can serve as a reference: in 2025, China Merchants Bank's retail loan balance was 3.65 trillion yuan, a slight year-on-year increase of 2.15%, indicating weak credit demand. However, during the same period, AUM, which covers the sum of all financial assets including deposits, wealth management products, funds, and insurance held by customers at the bank, climbed against the trend to 17.08 trillion yuan, a significant year-on-year increase of 14.44%.

**This may imply that funds have not evaporated during the downturn, but have merely changed where they are parked.**

When customers stop using leverage to expand their balance sheets, massive funds migrate from regular on-balance sheet deposits to off-balance sheet mutual funds, insurance, and agency wealth management pools.

This also answers the core mystery of the liability advantage: without competing on deposit interest rates, how does China Merchants Bank attract massive amounts of cheap current deposits?

The answer is its vast wealth management ecosystem.

Wang Liang revealed that wealth management business income was the primary driver of the company's revenue growth.

When customers use China Merchants Bank as their primary wealth management platform, frequent subscriptions and redemptions of wealth management products, fund transactions, and liquidity buffers reserved for risk aversion naturally lead to a massive amount of settlement funds being deposited in current accounts. The off-balance sheet AUM reservoir of 15.22 trillion yuan continuously supplies extremely low-cost current deposits to the balance sheet.

**The depth of wealth management constitutes the "uniqueness" of China Merchants Bank. It is one of the few joint-stock banks in the entire industry that does not rely on "volume to compensate for price" in corporate credit to prop up revenue.**

**As long as funds circulate within the system, the bank can continuously earn risk-free intermediate income, achieving true "capital-light" operations.**

Against the backdrop of general pressure on intermediate income across the industry, China Merchants Bank's wealth management fee and commission income recorded 26.711 billion yuan in 2025, a significant year-on-year increase of 21.39%. Among these, agency fund income was 5.846 billion yuan, up 40.36% year-on-year; and agency wealth management income was 9.347 billion yuan, up 18.98% year-on-year.

This explosion was not achieved overnight.

During the period of weak equity markets in previous years, China Merchants Bank had "proactively reduced fees" multiple times to defend market share. For example, in 2024, it announced that fund purchase fees would start from a 90% discount (10% of the original rate). This long-term strategy of exchanging profit for scale quickly translated into explosive power when the macroeconomic environment improved.

In the ranking of public fund holdings for the second half of 2025, China Merchants Bank was the only institution in the entire market, along with Ant Fortune, to join the "trillion-yuan club" for non-money market funds.

**Further deconstructing this 15.22 trillion yuan AUM reveals extreme "wealth concentration."**

As of the end of 2025, the number of "Golden Sunflower and above" customers with average daily assets of 500,000 yuan or more was 5.9315 million, an increase of 13.29% from the end of the previous year. This high-net-worth population, less than 2.7% of the total, actually controls the vast majority of AUM, indicating the high concentration of customer assets.

The highly concentrated data shows that China Merchants Bank's core barrier is deeply bonded with the affluent class, who have extremely strong risk resistance. Even as inclusive credit shrinks, top-tier wealth continues to accelerate its gathering toward China Merchants Bank.

At this point, China Merchants Bank's current restructuring path is clear—it has substantially evolved from a "capital-heavy model" reliant on balance sheet expansion to a "capital-light fortress" that collects intermediary fees based on fund deposits.

## **Unavoidable Imprints of the Cycle**

There is no absolute safe haven in the financial world.

An objective examination of the balance sheet reveals that the structural imprints left by the macroeconomic cycle on China Merchants Bank remain clear.

For example, the cornerstone of the bank's extremely low liability costs—the current deposit base—is being eroded.

China Merchants Bank's overall liability cost is as low as 1.26%, mainly due to its massive amount of current funds. In 2025, while the bank's average daily balance of total customer deposits exceeded 9.1 trillion yuan, the proportion of the average daily balance of current deposits officially fell below the 50% line, sliding to 49.4%; among these, the proportion of retail current deposits hit a low of 47.94%.

**This means that within the total deposit base of over 9 trillion yuan, term deposits, which pay higher interest, have for the first time become dominant.**

The loss of the current deposit defense line is a direct reflection of macroeconomic liquidity preferences. Residents are locking in long-term returns for risk aversion, and individual banks cannot defy the gravity of fund movements.

If further LPR reductions lead to pressure on asset-side returns, or if the trend of deposit terming continues, the low-cost current liability pool will be further diluted, and the rebound in China Merchants Bank's fourth-quarter net interest margin will still face tests.

**The management of China Merchants Bank did not avoid this issue, projecting in the financial report that the net interest yield in 2026 is still expected to face some pressure, but they will maintain stable operation through enhanced asset-liability portfolio management.**

Beyond the liability side, China Merchants Bank has deployed strategic resources to maintain book profit and asset quality.

The end-of-period non-performing loan ratio remained stable at 0.94%, and combined with the 1.21% increase in net profit attributable to the parent company, book-based risk resistance is extremely strong. However, during the same period, its provision coverage ratio dropped from 411.98% at the end of the previous year to 391.79%, with provisions for credit impairment losses decreasing in tandem throughout the year.

The consumption of strategic reserves is closely related to industry risks that have not yet been cleared.

Despite actively reducing real estate-related loans, the non-performing loan ratio in the real estate sector remains high at 4.64%, and the clearing of existing risks continues to consume current resources.

Regarding the consumption of the provision coverage ratio and risk issues, Zhu Jiangtao, Vice President of China Merchants Bank, explained at the earnings call that although the provision coverage ratio has "decreased slightly, it still remains at a high level of nearly 400%," which falls under "counter-cyclical management" and aims to smooth profit fluctuations.

Zhu Jiangtao believes that risks in some key areas of the company still exist, but "the peak has passed, and overall it is controllable."

**It is worth noting that even after a decline of 20 percentage points in a single year, China Merchants Bank's provision coverage ratio of 391.79% remains at a significantly high level among listed banks, providing an extremely sufficient safety net;**

**But this also proves that the current maintenance of profitability is based more on defense rather than explosive growth.**

To dissect this financial report, one must detach from linear expectations of a high-growth phase.

Today's China Merchants Bank is characterized by a capital-light operating barrier built on 17.08 trillion yuan in AUM, meticulous management of liability costs down to the basis-point level, and a provision defense line as thick as 391%.

Wang Liang once emphasized that a bank should be evaluated by its "ability to reduce volatility and navigate cycles."

Facing macroeconomic gravity, China Merchants Bank no longer offers high-elasticity performance explosions but is committed to becoming a bank with smaller fluctuations and a more stable foundation. In a cold winter full of uncertainty, "not falling behind, not defaulting, and maintaining a stable landing of the base" is the most scarce certainty value in the current capital market.

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