China Merchants Bank management: Willing to accept the decline in credit card revenue proportion to better control asset quality

Reporter from The Economic Daily (每经)｜Zhao Jingzhi    Editor from The Economic Daily (每经)｜Xu Shaohang

On the morning of March 30, China Merchants Bank (SH600036, share price 39.48 yuan, total market value 995.68 billion yuan) held its 2025 full-year results briefing. Chairman Mi Jianmin, President Wang Liang, Deputy Presidents Peng Jiawen and Xu Mingjie, and Chief Information Officer Zhou Tianhong attended the meeting.

The reporter noted that in 2025, China Merchants Bank’s retail loan non-performing loans increased by 0.1 percentage points, and the net interest margin rebounded in the fourth quarter against the trend. At the results briefing, institutions generally paid particular attention to China Merchants Bank’s net interest margin and asset quality issues.

The 2025 annual report shows that the non-performing loan ratios for China Merchants Bank’s small and micro loans and personal housing loans increased. Among them, the non-performing loan ratio for small and micro loans rose notably, from 0.79% to 1.22%. The non-performing loan ratio for personal housing loans increased from 0.48% to 0.51%, while the non-performing loan ratio for consumer loans declined from 1.04% to 1.02%.

“For this segment of small and micro businesses, our non-performing loans, watchlist loans, and overdue loans are all increasing. Although the non-performing ratio on consumer loans has declined somewhat, the watchlist rate has risen.” said Xu Mingjie, Deputy President and Chief Risk Officer of China Merchants Bank. “In the short term, the real estate market is still undergoing adjustments. Whether residents’ employment and income growth can improve quickly also exerts some pressure on asset quality such as small and micro loans and consumer loans.”

“We have observed that this year, the risk in the whole retail credit market is still in an upward phase, and the asset quality of credit card assets is also under certain pressure. We will also take proactive measures to control the risks in retail credit, ensuring that the quality of retail credit remains basically under control.” Xu Mingjie said. Going forward, China Merchants Bank will optimize its business structure, adhere mainly to loans secured by collateral, and also raise the loan admission standards—especially for consumer-type loans. It will dynamically adjust the admission standards for small and micro loans, continuously optimize the customer segment structure, adhere to early warning, early exposure, early resolution, and early disposal, and adopt a more proactive strategy to reduce the risk of retail credit and improve the quality of retail credit assets.

It is worth noting that, against the backdrop of a decline in credit card issuance volume, China Merchants Bank’s credit cards outstanding and the number of accounts outstanding have both increased last year, but its credit card transaction volume and credit card interest income and non-interest income have all declined, with transaction volume down year over year by 7.62% to 4.08 trillion yuan.

“Last year, credit cards had negative growth, and the balance decreased. But I believe this strategy is one of maintaining stable, low-volatility performance. We will select customer segments carefully and manage risk well. We are willing to accept a decline in the contribution to revenue share in order to manage asset quality, so the asset quality of our credit cards has stayed relatively stable.” said Wang Liang, President of China Merchants Bank.

Net interest margin is a core metric for measuring a bank’s profitability, representing the net interest income generated per unit of interest-earning assets. In recent years, due to the sustained downward trend in market interest rates, banks’ net interest margins have also continued to narrow.

According to the annual report, China Merchants Bank’s net interest yield in 2025 was 1.87%, down 0.11 percentage points year over year, but the spread widened sequentially in the fourth quarter.

Peng Jiawen, Deputy President of China Merchants Bank, said that, broken down by quarter, China Merchants Bank’s net interest margin in 2025 was 1.91% in the first three quarters—1.91%, 1.86%, and 1.83%—and returned again to 1.86% in the fourth quarter. There are two main characteristics. The first is that the net interest margin is still declining, but the pace of decline has been narrowing. Indeed, there was a certain rebound in the fourth quarter. “By the Group’s caliber, it rose by 3 bp (basis points); by the Company’s caliber, it rose by 2 bp. This shows that the subsidiaries contributed to it.”

The second is that China Merchants Bank has made substantial efforts on its asset-liability structure, including increasing the proportion of assets with higher yields as much as possible, and reducing assets with lower yields such as bills, among others, and making arrangements for asset-liability portfolio management.

Regarding whether the rebound in the spread in the fourth quarter can be sustained, Peng Jiawen said that in 2026 the spread will continue to narrow, but the magnitude of the narrowing will be better than last year. “Mainly due to external factors, such as asset demand being insufficient leading to asset repricing downward. But there is also a technical factor. In May last year, we reduced interest rates, and we still had a portion of loans that had not completed repricing. This will be concentrated in the first and second quarters of this year. The first quarter accounts for about 78%, and the remainder will be completed in the second quarter.” Peng Jiawen pointed out that this will also correspondingly drive loan yields upward to some extent.

Deposit interest rates repricing will be distributed relatively evenly across the whole year. However, Peng Jiawen noted that China Merchants Bank’s demand deposit proportion is around 50%. Since demand deposit rates have basically fallen as much as they can, and time deposit rates are also already low, the room for further decline in deposit interest rates is extremely limited.

“In 2026, we hope to achieve several goals. First, to make the narrowing of the spread smaller. Second, to stabilize the spread as soon as possible. Under the condition that no major policy is introduced in the external environment, we will be able to stabilize it as much as possible in the second half of the year. Third, we hope the spread level will still remain a market leader.” Peng Jiawen said.

Cover image source: The Media Resource Bank of The Economic Daily (每经)

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