Understanding Ping An Bank (000001.SZ) 2025 Annual Report: The Hardest Times Are Behind Us

In 2025, the banking industry’s overall performance gradually stabilized under the coordinated efforts of a “moderately loose” monetary policy and a “steady growth” policy. Market demand for high-dividend, low-valuation assets continued to rise, highlighting the defensive nature and intrinsic value of the banking sector.

Against this backdrop, Ping An Bank delivered its 2025 earnings report, with revenue of 131.442 billion yuan and net profit of 42.633 billion yuan, both slightly down year-on-year. On the surface, these figures continue the trend of performance pressure, but a deeper analysis reveals that the real focus is not on “how much has decreased” but on “how much has improved.”

This bank, once a retail dark horse racing ahead, has taken proactive steps over the past two years to slow down, clean up high-risk assets, and optimize its liability structure. The core message from the 2025 annual report is that the most difficult times may be behind, and Ping An Bank is transitioning from “stopping the bleeding” to “restoring blood flow” in its recovery phase.

1. Three Positive Signals Indicating a “Qualitative Change” Behind the Performance

A significant narrowing of the net interest margin (NIM) decline is one of the most noteworthy signals in this annual report.

Net interest margin is the bank’s “lifeline.” Over the past two years, with the continuous reduction of the Loan Prime Rate (LPR) and efforts to benefit the real economy, industry-wide NIM has been under pressure. In 2024, Ping An Bank’s NIM decreased by 51 basis points year-on-year, but in 2025, this decline narrowed to 9 basis points.

This change is not accidental—the annual report shows that the bank’s average interest-bearing liabilities’ interest expense rate fell by 47 basis points to 1.67%, and the average interest paid on deposits decreased by 42 basis points to 1.65%. Meanwhile, the average daily balance of demand deposits increased by 5.8% year-on-year. This indicates that the bank’s refined management of liabilities is taking effect, and the accumulation of low-cost deposits is strengthening, laying a solid foundation for stabilizing the NIM.

The successful “stopping the bleeding” in retail business directly reflects the effectiveness of strategic adjustments.

Previously, reductions in high-risk business led to revenue declines and profit pressure, with retail financial net profit dropping below 3 billion yuan in 2024, accounting for only 0.6% of the bank’s total profit. However, the 2025 annual report shows retail financial net profit has recovered to 2.68 billion yuan, with its profit contribution rising to 6.3%.

More importantly, this recovery was not driven by scale expansion but by a significant reduction in impairment losses after risk cleanup—credit and other asset impairment losses in retail financial business decreased by nearly 11.15 billion yuan year-on-year, a drop of over 22%. The non-performing loan (NPL) ratio for personal loans fell from 1.39% to 1.23%, and the NPL ratios for credit cards, consumer loans, and mortgages all declined noticeably. Clearly, the management’s strategic shift to “actively shrink high-risk assets and increase mid-risk assets” is gradually paying off.

The countercyclical growth in wealth management has injected new momentum into retail business.

Despite market volatility and cooling fund issuance in 2025, Ping An Bank’s wealth management fee income reached 5.061 billion yuan, up 15.8% year-on-year. Notably, agency income from personal insurance reached 1.292 billion yuan, a substantial increase of 53.3%, becoming the most prominent growth driver.

This reflects the continued strength of Ping An Group’s integrated financial advantages—contributing to new wealth clients accounted for 50.2% of total, with new client AUM representing 49.1%. The growth rate of high-net-worth clients significantly outpaced that of overall retail clients, with private banking clients increasing by 9.1% year-on-year, indicating that the “refinement” strategy is taking effect and customer structure is continuously optimizing.

2. Low Valuation and High Dividends: Building a Double Safety Margin

If the above indicators point to a fundamental improvement, then dividend policy and valuation determine the bank’s investment value in the current market environment.

In a year when revenue and profit declined, Ping An Bank increased its dividend payout.

In 2025, it paid a cash dividend of 5.96 yuan per 10 shares, totaling 11.566 billion yuan, accounting for 28.83% of net profit attributable to parent shareholders. Based on the March 24 closing price, the dividend yield is 5.48%.

In the context of the ongoing decline of risk-free rates and the 10-year government bond yield hovering around 2%, such a dividend yield is highly attractive to long-term investors like insurance funds, pension funds, and bank wealth management products.

More importantly, the company’s ability to implement this dividend policy sends two signals: first, it demonstrates sufficient capital adequacy—core Tier 1 capital adequacy ratio, Tier 1 capital ratio, and total capital adequacy ratio increased by 0.24, 0.80, and 0.66 percentage points respectively from the end of last year, reaching 9.36%, 11.49%, and 13.77%; second, it shows that management values shareholder returns clearly.

From a valuation perspective, Ping An Bank remains at a historically low level. According to Futu, as of the close on March 24, the latest price-to-book ratio is approximately 0.47, ranking mid-tier among joint-stock banks and well below the industry’s historical average.

Generally, the core drivers of valuation recovery for bank stocks are improvements in asset quality and an inflection point in earnings growth. By the end of 2025, Ping An Bank’s non-performing loan ratio was 1.05%, down 0.01 percentage points from the end of the previous year; its loan loss reserve coverage ratio was 220.88%, maintaining good risk buffer capacity. The NPL formation rate was 1.63%, down 0.17 percentage points year-on-year, declining for two consecutive years. Continuous asset quality improvement provides fundamental support for valuation recovery.

It’s worth noting that, looking at the management’s timeline, 2026 is a critical node.

At the August 2024 mid-year results conference, Ping An Bank President Ji Guangheng explicitly outlined a reform timetable: 2024 would be the toughest year, with hopes to resolve retail issues by 2025 and return to growth in 2026.

From the 2025 annual report, retail net profit has recovered from less than 3 billion yuan to 2.7 billion yuan, and the non-performing loan ratio for personal loans has significantly declined. The “most difficult period” appears to be over, and the goal of “returning to growth in 2026” is gradually becoming clearer.

3. Conclusion

While the industry still wavers between scale expansion and risk control, Ping An Bank has spent three years completing a “proactive contraction—risk cleanup—structural optimization” impressive turnaround. The 2025 annual report proves that this path, though challenging, is correct—narrowing NIM decline, bottoming retail profits, and steady growth in wealth management are not achieved overnight but reflect strategic resolve.

For investors, a PB ratio of 0.47 and a dividend yield of 5.48% already provide sufficient safety margins amid uncertainties. While the market is still debating when revenue will turn positive, it’s worth looking further ahead: a bank willing to innovate and reform itself will ultimately traverse cycles and realize its own valuation re-rating.