As the disclosure season for half-year reports unfolds, the operational performance of key financial sectors—including banks, brokerages, insurers, and funds—for the first half of 2026 is now coming to light. Over the coming days, we will publish a series of analyses tracking the core data from these financial institutions' interim reports, offering in-depth interpretations of industry trends and shifts to present a comprehensive view of China's financial sector development.

The six largest state-owned banks—Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China—have all released their mid-year results for 2026. During the first six months of the year, these six banks collectively generated over 2 trillion yuan in operating revenue, with net profits attributable to shareholders totaling approximately 712.6 billion yuan. In terms of growth, their revenue increased between 4% and 11% year-on-year, while net profit growth ranged from 4% to 6%, with all institutions posting positive gains. This marks the first time since 2022 that all six banks have simultaneously achieved growth in both revenue and net profit. On the interest margin front, net interest margins—which had been under pressure for two consecutive years—are now showing signs of stabilization, with several banks reporting improvements. Additionally, the stronger earnings performance has bolstered shareholder returns; based on interim dividend plans, the six banks intend to distribute a combined total exceeding 220 billion yuan, another significant data point in these reports.

Where stabilization is evident: Compared with earlier figures, several banks have seen their net interest margins improve or hold steady. China Construction Bank stands out in this regard, posting a net interest margin of 1.37% for the first half, up 3 basis points from the full-year 2025 level and 1 basis point from the first quarter, reflecting a sequential, upward stabilization trend. Agricultural Bank of China reported a net interest margin of 1.28%, an increase of 2 basis points from the first quarter. Bank of China saw its margin rise 1 basis point year-on-year to 1.27%, while Industrial and Commercial Bank of China improved to 1.29%, up 1 basis point from the previous year. Bank of Communications also strengthened its recovery, with its margin climbing 2 basis points year-on-year to 1.23%. Although Postal Savings Bank of China's margin declined 7 basis points year-on-year to 1.63%, it remains relatively high within the sector.

Cost control on the liability side has been a key driver behind the narrowing margin declines. At a results briefing, China Construction Bank President Zhang Yi noted that average domestic demand deposit balances rose by 542.4 billion yuan from the end of last year, an increase of 382.8 billion yuan year-on-year, while the interest payout rate dropped 7 basis points year-on-year and the rate on time deposits fell 34 basis points from the start of the year. Agricultural Bank of China President Wang Zhihang pointed out that, aided by the continued repricing of maturing time deposits, the deposit payout rate decreased 21 basis points from the end of 2025, with interest expenses declining 4.7% in the first half. Bank of China Vice President Liu Chenggang explained that net interest margin from foreign currency operations rose substantially year-on-year, with overseas institutions' margin up 11 basis points, providing important support to the group's overall figure. Meanwhile, Industrial and Commercial Bank of China President Liu Jun highlighted that the marginal stabilization is due to "more appropriate liability costs and an improved liability structure, not merely repricing effects."

How to interpret the trend: Experts remain cautious about whether net interest margins have reached a definitive turning point. Lou Feipeng, a researcher at Postal Savings Bank of China, believes that downward pressure on margins persists due to weak effective credit demand, characterizing the current situation as more of a temporary stabilization. Dong Ximiao, chief economist at Unicom, describes the state as an "L-shaped bottoming out"—noting that the boost from time deposit repricing will diminish in the second half of the year, while asset-side yields still face downward strain. A clear inflection point, he adds, will depend on the trajectory of economic recovery and changes in the interest rate environment.