Minsheng Bank's 2025 revenue increased by 4.82%, net profit decreased by 5.37%, and credit impairment of 53.95 billion yuan dragged down profits.

Ask AI · Which industry risks are highlighted behind the surge in credit impairment losses?

【Text / Yu Shan Guan Jin Studio Wang Li】

Recently, China Minsheng Bank (600016.SH) disclosed its earnings report. During the reporting period, the bank achieved operating income of 142.865 billion yuan, up 4.82% year-on-year, recording a noticeably positive growth again after many years. However, net profit attributable to the bank’s shareholders was 30.563 billion yuan, down 5.37% year-on-year. The nearly 10-percentage-point gap in growth rates between revenue and net profit highlights how the rapid rise in credit impairment losses is eroding profitability.

 

In terms of revenue structure, net interest income was 100.126 billion yuan, up only 1.46% year-on-year. The bank mainly relied on a moderate expansion of interest-earning assets rather than any improvement at the interest-rate end. The net interest margin was 1.40%, slightly up by 1 basis point year-on-year. Although it remained stable amid industry-wide pressure, it is still at a historical low, narrowing by more than 50 basis points compared with 1.91% in 2021.

Non-interest income performed relatively well, reaching 42.739 billion yuan, up 13.67% year-on-year. Its share of revenue increased from 27.59% to 29.92%. Investment income made a relatively large contribution, showing that during the market rebound the bank increased the active management of financial assets.

The pressure on the profit side mainly came from rising credit costs. In 2025, China Minsheng Bank’s credit impairment losses were 53.950 billion yuan, an increase of 9.476 billion yuan year-on-year, up 18.64%. This single-item expense basically offset the incremental increase in operating income for the year. In asset-quality terms, the non-performing loan ratio rose slightly from 1.47% at the end of the previous year to 1.49%, but the balance of loss loans grew sharply by 23.58% compared with the end of the previous year, indicating deterioration in the structure of existing non-performing assets. Meanwhile, the balance of watchlist loans increased from 120.370 billion yuan to 121.195 billion yuan, and potential risks still need to be monitored.

 

Profitability indicators continued to trend downward. The weighted average return on net assets (ROE) was 4.93%, down 0.25 percentage points from the previous year, falling below 5%. The return on total assets (ROA) was 0.39%, remaining at a low level for multiple consecutive years. For capital adequacy, the core tier 1 capital adequacy ratio rose slightly from 9.36% to 9.38%. Overall capital adequacy increased to 13.06%, meeting regulatory requirements but still leaving a gap versus state-owned large banks. Regarding dividends, the total cash dividend distributed for every 10 shares for the full year was 1.89 yuan (interim 0.53 yuan, final 1.36 yuan). The total cash dividend amount was 8.274 billion yuan, accounting for about 27% of net profit attributable to the parent. The dividend payout schedule was relatively stable, but compared with historical peak periods it had already shrunk noticeably.

**Interest income declined by 11.24%, while non-interest income carries the banner for Minsheng Bank’s revenue growth**

Minsheng Bank’s operating income grew by 4.82% in 2025. On the surface, it was a broad-based rebound, but in a finer breakdown it was a structural handoff: interest income continued to shrink under the drag of declining loan pricing, non-interest income stepped in to fill the gap and provided additional incremental growth. On the interest side, full-year interest income was 222.855 billion yuan, down sharply by 11.24% year-on-year, with the decline exceeding market expectations.

 

Behind this figure was a comprehensive decline in the integrated yield on loans. The average yield on corporate loans fell from 3.59% to 3.04%, personal loans fell from 4.51% to 4.01%, short-term loans fell from 3.92% to 3.53%, and medium- and long-term loans fell from 3.98% to 3.34%. With multiple factors overlapping—market-driven interest rate declines, repricing of existing mortgages, and policies to reduce financing costs for the real economy—the erosion of loan-side interest rates has become a structural reality.

 

By contrast, the decline in expenses on the interest-bearing liabilities side was even more pronounced. Full-year interest expenses dropped from 152.396 billion yuan to 122.729 billion yuan, a decline of 19.47%. Among them, the interest rate paid on deposits fell from 2.14% to 1.74%, and the consolidated cost rate of interbank liabilities and payable bonds also narrowed significantly.

Net profit spread also rose by 1 basis point against the trend. Based on historical data, Minsheng Bank’s net interest margin has continued to decline since 2021: 1.91% in 2021, 1.60% in 2022, 1.46% in 2023, 1.39% in 2024. In 2025 the downtrend stopped and it rebounded slightly to 1.40%. Whether it can form a trend-based turning point still depends on the subsequent evolution of the interest-rate environment.

However, the absolute level of the net interest margin at 1.40% remains within a relatively low range among domestic listed joint-stock commercial banks. The average yield on interest-earning assets has fallen from 4.53% in 2020 to 3.12% currently. Although the average cost rate of interest-bearing liabilities has also declined along with it, the synchrony of narrowing at both ends is not fully symmetrical. The path to repairing the interest spread is expected to be long.

 

On the scale side, total loans fell slightly from 4.45 trillion yuan to 4.43 trillion yuan, down about 20 billion yuan year-on-year, a decline of 0.45%. Among them, corporate loans increased by 71.8 billion yuan to 2.75 trillion yuan, up 2.68%; personal loans shrank by 91.7 billion yuan from 1.77 trillion yuan to 1.68 trillion yuan, down 5.18%. The proactive contraction of personal loans is directly related to rising risks in credit cards and other consumer credit, indicating that Minsheng Bank is trading off scale for quality. On the deposits side, total deposits were 4.28 trillion yuan, up 28.2 billion yuan year-on-year. Personal deposits increased by 92.0 billion yuan, while corporate deposits decreased by 61.5 billion yuan. The faster growth in personal deposits, to some extent, improved the stability of the liability structure.

Non-interest income became the main driving force behind revenue growth in 2025. Net fee and commission income was 18.321 billion yuan, up slightly by 0.42% year-on-year. Among them, bank card fee income fell by 7.65%, agency business fee income fell by 6.16%, but settlement and clearing fee income surged by 40.61%, partially offsetting the drag from the first two items.

A larger contribution came from the jump in other non-interest net income: it increased by 5.063 billion yuan year-on-year, up 26.16%. It mainly relied on trading opportunities arising from fluctuations in the bond market and volatility in the equity market, leading to a relatively significant increase in investment income.

It is worth noting that this type of income is highly dependent on market conditions and is volatile; whether it can be sustained remains uncertain. If the market environment turns, the supporting effect on non-interest income will weaken significantly.

In terms of technology investment, full-year information technology expenditure was 5.627 billion yuan, accounting for 4.22% of operating income, and the scale of fintech personnel continued to expand. This level of investment is medium-to-above-medium among joint-stock banks. However, in the short term, the direct impact on financial indicators is still not obvious. It is reflected more in the building of long-term mechanisms such as the refinement of risk-control models and the digitalization of customer operations. The cost-to-income ratio was 35.70%, down 1.95 percentage points from the previous year, reflecting that Minsheng Bank has achieved some results in expense control. Business and management expenses were 51.006 billion yuan, down slightly by 0.61% year-on-year.

**As real estate is gradually cleared out, risks in consumption and retail surface**

In 2025, Minsheng Bank’s asset quality remained stable under static indicators: the non-performing loan ratio rose only by 0.02 percentage points to 1.49%, and the provision coverage ratio edged up to 142.04%. However, when you dig deeper into the dynamic structure of non-performing loans and the sharp jump in credit costs, it turns out that despite surface stability there are multiple divergences hidden underneath.

The jump in loss loans is worth watching. By the end of 2025, the balance was 41.336 billion yuan, up 7.986 billion yuan from the end of the previous year, an increase of 23.58%. Meanwhile, substandard and doubtful loans fell by 30.92% and 9.37%, respectively. These “two-end reverse” changes reflect the bank’s proactive acceleration of the downgrading and write-off of existing non-performing assets to clean up the balance sheet, but the cost is that current-period credit impairment losses are directly pushed up. **Credit impairment losses in 2025 totaled 53.950 billion yuan**, up 9.476 billion yuan year-on-year, an increase of 18.64%, becoming the primary factor eroding net profit.

 

Structural changes at the industry level are more substantive. Non-performing loan amount in the real estate sector fell sharply by 4.962 billion yuan from the end of the previous year. The non-performing rate dropped from 5.01% to 3.61%, indicating that the efforts to dispose of real estate non-performing assets made over the past few years have started to show results and that existing stock risks are being cleared at the margin. However, the balance of real estate loans also shrank to 3,254.43 billion yuan, down 79.96 billion yuan from the end of the previous year—“trading volume for quality,” with the path clearly visible. At the same time, non-performing loans in the leasing and business services industry increased by 3.026 billion yuan, mainly due to downgrades of some individual large corporate clients. Non-performing loans in the wholesale and retail industry increased by 2.356 billion yuan, and the non-performing rate rose from 1.44% to 2.27%, reflecting the predicament faced by the consumer goods distribution sector under macroeconomic pressure. These two industries are becoming new areas of risk focus on the corporate side.

Pressure on the personal loan side is also not to be underestimated. Personal non-performing loans were 321.53 billion yuan, up 3.31 billion yuan from the end of the previous year. The non-performing rate rose from 1.80% to 1.92%, an increase exceeding that on the corporate side. Among them, the non-performing rate of credit card overdrafts rose further from 3.28% to 3.87%, involving a balance of 167.35 billion yuan, accounting for more than half of personal non-performing loans. The non-performing rate of micro and small business loans rose from 1.54% to 1.63%. Housing loans are one of the few bright spots on the personal side: the non-performing rate fell from 0.96% to 0.77%, benefiting from improved repayment capacity after the downward adjustment of existing mortgage interest rates, as well as from the bank’s proactive contraction of mortgage volumes in high-risk areas.

Regionally, the Yangtze River Delta and the Pearl River Delta each saw increases in non-performing loans of 14.37 billion yuan and 9.52 billion yuan compared with the end of the previous year, respectively. The non-performing rates rose by 0.08 and 0.14 percentage points, respectively. The rise in non-performing loans in these two major traditional high-quality regions reflects the spread of operating pressure among small and medium-sized enterprises and the spread of defaults in personal consumer credit in the context of economic pressure. Non-performing loans at the headquarters totaled 180.36 billion yuan, mainly concentrated in the credit card business, which also shows the characteristic that retail risks are being transmitted to leading institutions. The balance of watchlist loans was 1,211.95 billion yuan, accounting for 2.74%, slightly up from the end of the previous year.

 

This “tomorrow’s non-performing loans” leading indicator continues to accumulate. It implies that if the external environment does not show a clear improvement, the non-performing loan ratio will still face pressure to rise further, and a true inflection point for stabilizing asset quality has not yet arrived. The capital adequacy ratio system shows overall improvement: the core tier 1 capital adequacy ratio increased from 9.36% to 9.38%; the tier 1 capital adequacy ratio rose from 11.00% to 11.47%; and the total capital adequacy ratio rose from 12.89% to 13.06%. Net other tier 1 capital increased by about 30 billion yuan, up 31.31%, which is related to the continued issuance of perpetual bonds in recent years to replenish capital.

But from the regulatory floor perspective, the core tier 1 capital adequacy ratio is only about 1.63 percentage points above the safety buffer of 7.75%, leaving limited room. Under the continuous expansion of risk-weighted assets, the shortage of capital endogenous generation capacity remains a medium- to long-term constraint. In terms of loan concentration, the proportion of loans to the single largest customer fell from 2.42% to 1.42%, and the proportion of loans to the top ten customers fell from 10.17% to 8.34%. The continued reduction in concentration risk is a clear improvement for the current period.

Overall, in 2025, Minsheng Bank saw structural repair on the revenue side. Non-interest income became the main growth driver, and improvements in liability costs also supported the stabilization of the interest spread. However, the sharp increase in credit impairment losses directly dragged down net profit. Although real estate risk is marginally cleared, non-performing loan pressure in retail and some corporate industries is still rising. The bank is still facing a difficult balancing act among scale, risk, and capital, and a substantive rebound in profitability still needs further confirmation from the macro environment and the effectiveness of its internal risk-control measures.