China Merchants Bank (3968) Q4 2025 earnings summary

Executive summary

• Achieved dual growth in revenue and net profit for 2025, with net operating income at RMB 337.273 billion (up 0.05%) and net profit attributable to shareholders at RMB 150.181 billion (up 1.21%), despite a challenging macroeconomic environment.

• Maintained industry-leading ROAA (1.19%-1.28%) and ROAE (13.44%), with stable asset quality and strong risk compensation.

• Retail Finance contributed over half of net operating income and pre-tax profit, with retail AUM exceeding RMB 17 trillion (up 14.44%).

• Accelerated digital transformation, investing RMB 12.9 billion in IT, deploying over 800 AI applications, and saving 15.56 million manual hours.

• Maintained AAA MSCI ESG rating for two consecutive years, with green loan and leasing balances growing over 20%.

Financial highlights

• Net interest income rose 2.04% to RMB 215.59 billion; NIM was 1.87%, down 11bps year-on-year.

• Non-interest income fell 3.31% to RMB 21.7 billion, but net fee and commission income grew 4.39%, first positive growth since 2022.

• Total assets reached RMB 13,070.523 billion (up 7.56%), total loans and advances RMB 7,258.058 billion (up 5.37%), and customer deposits RMB 9,836.130 billion (up 8.13%).

• Cost-to-income ratio at 32.01%, up slightly year-on-year.

• NPL ratio at 0.94%, allowance coverage ratio at 391.79%.

Outlook and guidance

• Expects continued pressure on NIM and profitability in 2026 due to low interest rates, weak demand, and policy-driven fee reductions.

• Targeting 6–7% growth in both total deposits and total loans for 2026, with a focus on technology, green, inclusive, retirement, and digital finance.

• ROE expected to remain under pressure but targeted to stay above 10% as a bottom.

• Will focus on value creation, digital transformation, risk management, and balanced development across major business segments.

• External environment presents challenges, but China’s economic fundamentals remain strong, offering growth opportunities.