FINANCE

China’s Bank Profits Stabilize as Bad Loans Climb

Published: Nov. 17, 2025 1:39 p.m. GMT+8

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China’s commercial banks saw their profitability stabilize in the first three quarters after a first-half decline, even as their core profitability metric hovered at a historic low and bad loans mounted.

Net profit for commercial banks was flat year-on-year for the first nine months of the year at 1.87 trillion yuan ($263 billion), an improvement from a 1.2% drop in the first six months, according to data released Friday by the National Financial Regulatory Administration.

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China’s commercial banks’ net profit was flat at 1.87 trillion yuan in the first nine months of 2023, after declining in the first half.
Net interest margin remained at a historic low of 1.42%, and asset quality worsened with nonperforming loans reaching 3.5 trillion yuan.
Smaller banks saw higher increases in NPL ratios, while the “Big Six” and national joint-stock banks maintained more stable asset quality.

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Who’s Who

State-owned commercial banks: The "Big Six" **State-owned commercial banks** maintained a net interest margin (NIM) of 1.31% in the third quarter, unchanged from the previous quarter. Their nonperforming loan (NPL) ratio rose slightly by 0.01 percentage points to 1.22%. They are among the bank types facing challenges from a low-interest-rate environment and government directives to support the real economy.

City commercial banks: City commercial banks in China saw their net interest margin remain at 1.37% in the third quarter, unchanged from the previous quarter. They faced notable asset quality deterioration, with their nonperforming loan (NPL) ratio rising by 0.08 percentage points to 1.84%. This indicates greater pressure on smaller lenders compared to larger state-owned counterparts.

Rural commercial banks: Rural commercial banks in China faced challenges, with their Net Interest Margin (NIM) remaining unchanged at 1.58% in the third quarter. Their asset quality deteriorated significantly, as their Non-Performing Loan (NPL) ratio climbed by 0.05 percentage points to 2.82%, indicating greater pressure compared to other bank types.

National joint-stock commercial banks: National joint-stock commercial banks experienced a slight improvement in their net interest margin (NIM), which edged up by 1 basis point to 1.56%. Their nonperforming loan (NPL) ratio remained unchanged at 1.22%.

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