CITIC Bank, following the tide

Questioning AI · How Does the Narrowing Net Interest Margin at CITIC Bank Reflect Industry Transition Pains?

Produced by | Caixin Society

Article | Jia Ru

Editor | He Bi

When news broke that assets had first surpassed 10 trillion yuan, alongside a financial report showing slight revenue decline and continued narrowing of net interest margin, CITIC Bank’s 2025 performance report no longer tells just a single bank’s story, but is a microcosm of the entire Chinese banking industry struggling to navigate the tide of change.

CITIC Bank’s 2025 financial report shows total assets increased by 6.28% year-on-year to 10.13 trillion yuan, net profit attributable to the parent grew by 2.98% to 70.618 billion yuan, but operating income declined slightly by 0.55% to 2.12475 trillion yuan.

This seemingly contradictory data precisely reflects CITIC Bank’s current situation: scale is still expanding due to inertia, but growth engines are weakening. The slight profit increase relies more on meticulous cost control and cautious disposal of risk assets rather than vigorous business vitality.

The issues CITIC Bank faces—stagnant revenue growth, declining net interest income, pressure on retail asset quality, continued deposit termization, and a slight dip in capital adequacy—are all like the Damocles sword hanging over the entire industry.

This is not an isolated case for CITIC Bank but a collective “drifting with the tide” among all banks under multiple forces: macroeconomic cycles, deepening interest rate marketization, accelerated financial disintermediation, and changing risk structures. It involves both passive adaptation and a struggle to adjust course and find new growth drivers amid the waves.

Interest Margin Challenges and Debt Management

CITIC Bank’s net interest margin shrank from 1.77% in 2024 to 1.63%, a decline of 0.14 percentage points. Despite multiple rounds of deposit rate cuts, the decline in liability costs has not fully offset pressure on the asset side. The trend of deposit termization remains a long-term challenge for liability management, as residents and enterprises, uncertain about the future, prefer fixed-term deposits to lock in returns, raising the bank’s overall interest expenses.

CITIC Bank has optimized its deposit structure, maintaining a relatively high proportion of corporate demand deposits at 46%, while reducing high-cost deposits such as three-year and longer-term structured deposits, thereby recovering some interest margin from the liability side. This “asset-side concessions, liability-side attack” tug-of-war is a common scenario across the banking industry.

If narrowing interest margins erode bank profits, then structural pressures on asset quality directly threaten the health of the balance sheet. The bank’s financial report clearly reflects this trend: its non-performing loan (NPL) ratio for personal loans rose by 0.07 percentage points to 1.32%, with consumer loans (excluding credit cards) NPLs surging by 0.66 percentage points to 2.80%, and credit card NPLs increasing by 0.12 percentage points to 2.62%.

The report attributes this to “the current economic situation and weak income expectations,” pinpointing the socio-economic roots of retail risk exposure. High household leverage, slowing income growth, and the delayed risks from rapid digital-era expansion of consumer credit are all contributing factors.

More worrying is the “joint debt” risk—customers borrowing from multiple institutions—whose default probability is much higher than that of ordinary borrowers. However, due to information silos, banks find it difficult to effectively identify these risks before lending.

Additionally, CITIC Bank’s non-performing rate on corporate real estate loans rose by 0.46 percentage points to 2.67%, indicating that despite ongoing policy efforts, the adjustment in the real estate market continues to transmit risks into the financial system. Although local government financing platform debt is being managed in an orderly fashion, it remains a key risk area for banks.

CITIC Bank has maintained overall non-performing ratios through strengthened collection and write-offs, but this has come at the cost of real profits. The appearance of “stability” in asset quality is largely the result of surgical risk clean-up measures that sacrifice profits.

Structural Challenges in Asset Quality

On the liability side, CITIC Bank faces a “impossible triangle”: maintaining deposit scale to support asset expansion, controlling liability costs to ease interest margin pressure, and coping with the “deposit migration” to wealth management and capital markets.

In 2025, deposit migration was a recurring theme, and the trend of deposit termization persisted. The bank’s corporate and personal fixed deposits grew faster than demand deposits.

In response, the banking sector launched successive rounds of “interest rate cuts.” Starting from May 2025, state-owned banks led the way, followed by joint-stock and smaller banks, all lowering deposit rates across various terms, with long-term, high-cost products being phased out or limited.

By early 2026, many small and medium-sized banks saw three- and five-year fixed deposit rates drop into the “1%” era, with some even experiencing inverted yield curves. This deep rate decline marks China’s interest rate environment entering the “1% era.” For savers, this narrows traditional wealth preservation and appreciation paths; for banks, it’s both a helpless response and an inevitable adjustment of liability structures.

Within this industry-wide dilemma, different banks’ fortunes diverge sharply. State-owned giants, leveraging systemic importance, extensive branch networks, and stable corporate client relationships, act as “ballast stones.” City and rural commercial banks, relying on regional strengths and serving local SMEs, show stronger performance resilience, with net profit growth rates of 12.87% and 4.57%, respectively.

In contrast, joint-stock banks find themselves in a “middle ground”: lacking the full license advantages and resource endowments of state banks, yet not having the regional stickiness of local banks, making them vulnerable in fierce homogeneous competition.

As a representative of joint-stock banks, CITIC Bank’s total assets surpass 10 trillion yuan, ranking among the industry’s top, but it still cannot escape the industry-wide profit pressures.

For CITIC Bank, the challenge is how to break through the common bottleneck of joint-stock banks under the halo of scale and find a differentiated, distinctive development path—more urgent than simply pursuing asset size.

Transformation and Value Creation

CITIC Bank’s 2025 financial report is a typical “health check” of the industry, reflecting the collective anxiety and transition pains of China’s banking sector in the “post-scale” era.

The continued narrowing of net interest margin squeezes traditional profit space; structural risks in asset quality hide potential dangers; cost control on liabilities is like walking a razor’s edge; and, amid increasing segmentation, joint-stock banks are seeking their own survival niches.

For CITIC Bank and China’s banking industry as a whole, moving away from dependence on scale and interest margins toward customer-centric value creation, digital transformation to improve efficiency, business restructuring to find new growth points, and excellent risk management to navigate cycles are the only ways forward. This process will inevitably involve pain and challenges, but it is also the only path for the industry to evolve from “big” to “strong.”

The tide has already shifted direction. Only by deeply understanding and mastering this force can banks stand out amid the turbulent seas.