"We have abandoned the obsession with scale and are now more focused on growth that emphasizes both efficiency and quality," said Lu Wei, President of China Citic Bank Corporation Limited, at the interim results conference on August 28. This statement encapsulates the development path this joint-stock bank is pursuing.
As of the reporting period, China Citic Bank Corporation Limited's total assets reached 9.86 trillion yuan, representing a 3.42% increase from year-end, just one step away from the 10 trillion yuan milestone. A detailed analysis of the interim report reveals that amid industry-wide challenges of "declining revenue, narrowing margins, and rising non-performing loans," this large joint-stock bank with assets approaching 10 trillion yuan has not returned to the old path of "competing on scale and chasing performance." Instead, it has chosen a "structure-first" approach, advancing structural adjustments across asset-liability management, customer segments, and business layout to achieve growth that balances efficiency and quality.
At this results conference, President Lu Wei, together with several senior executives, detailed China Citic Bank Corporation Limited's strategic logic for addressing challenges such as margin pressure and rising retail NPLs.
**Net Interest Margin Management: From Disadvantage to Relative Advantage**
For banks, the "net interest margin" serves as a profit stabilizer—it represents the spread between interest earned on loans and interest paid on deposits. The narrower this spread, the smaller the bank's profit margin.
Narrowing net interest margins represent a common challenge facing the banking industry, and China Citic Bank Corporation Limited is no exception. In the first half of 2025, the bank's net interest margin contracted from 1.77% in 2024 to 1.63%, but it still outperformed the industry average. Zhang Qing, Board Secretary of China Citic Bank Corporation Limited, stated at the results conference: "The first-half net interest margin was 1.63%, with the absolute level exceeding the industry average by 21 basis points, ranking among the top performers in joint-stock banks."
Lu Wei reflected: "Five years ago, we were among the first in the industry to propose stabilizing margins, adhering to a balanced volume-price operating philosophy. Over the past three years, our deposit cost and margin performance has consistently outperformed the market trend, transforming margins from a disadvantage to a relative advantage." However, Lu Wei acknowledged that "margin downward pressure was significant at the beginning of this year," noting that maintaining advantages during industry downturns relies on China Citic Bank Corporation Limited's adjustments on both asset and liability sides.
Regarding asset-side optimization, Lu Wei explained that China Citic Bank Corporation Limited is reducing "unprofitable" assets, with a typical move being the compression of low-yield bill assets. Bill assets represent one category of bank assets but offer relatively low returns and can become a drag on yields when market rates fluctuate. In the first half of 2025, China Citic Bank Corporation Limited proactively and significantly reduced bill asset scale—compressing 140 billion yuan in the first quarter and another 80 billion yuan in the second quarter. This adjustment improved the annualized yield on market-based assets by 1.5 basis points.
Regarding liability cost control, China Citic Bank Corporation Limited has consistently maintained strict control over high-cost deposits in recent years, with the first half of 2025 seeing "further compression on an already low base." The current interest-bearing liability cost rate stands at 1.67%, ranking second-lowest among joint-stock banks. This achievement stems from the bank's continued strict control over "resource deposits"—structured, long-term, higher-priced deposit products.
As of the reporting period, China Citic Bank Corporation Limited recorded operating revenue of 105.8 billion yuan, down 2.99% year-on-year. In terms of asset-liability scale, total loans and advances reached 5.8 trillion yuan, up 1.43% from year-end, while customer deposits totaled 6.1 trillion yuan, up 5.69% from year-end. Lu Wei acknowledged that the banking industry faces continued margin pressure, as high-yield loans mature and new loans may offer lower returns.
However, China Citic Bank Corporation Limited's response strategy remains clear: continue "optimizing asset-liability structure." Specifically, this involves continuing to fully support credit deployment while striving to keep bill discounting scale at low levels to drive further annual margin improvement, and continuing to pursue balanced volume-price deposit development, optimizing deposit structure, deepening transaction settlement bank construction, stabilizing demand deposit scale, while maintaining strict control over resource deposit scale to preserve margin leadership advantages.
**Asset Quality: Addressing Retail NPL Challenges**
Beyond margins, asset quality represents another "lifeline." The more non-performing loans, the more bad debt provisions banks must set aside, eroding profits accordingly.
The report shows that as of June-end, China Citic Bank Corporation Limited's non-performing loan balance reached 67.134 billion yuan, an increase of 649 million yuan from year-end, with the NPL ratio at 1.16%, flat with year-end. The provision coverage ratio stood at 207.53%, up 0.42 percentage points from the first quarter but down 1.9 percentage points from year-end, with overall asset quality remaining stable.
Regarding asset quality fluctuations, Hu Gang, Vice President of China Citic Bank Corporation Limited, noted at the conference that the bank's current NPL ratio and provision coverage ratio remain within reasonable ranges, with key indicators showing stable improvement trends, while forward-looking indicators suggest potential further improvement in asset quality.
Hu Gang specifically mentioned that the operating value of China Citic Bank Corporation Limited's "problem assets" is improving. He explained that in the first half, the bank recovered 6.19 billion yuan from previously written-off assets. In fact, since 2021, China Citic Bank Corporation Limited has annually recovered over 10 billion yuan from written-off assets, with the highest year reaching 16.1 billion yuan—these recoveries can supplement profits.
Addressing market concerns about "rising retail NPLs," Hu Gang responded candidly: "This should be a relatively common issue facing the banking industry since last year and this year."
Facing this challenge, China Citic Bank Corporation Limited has made proactive structural adjustments in both product and customer structure.
Regarding product structure adjustments, the bank increased deployment of low-risk products. In the first half, China Citic Bank Corporation Limited's mortgage loan increments ranked first among comparable peers, with mortgages accounting for 47% of retail loans, up 1.9 percentage points from year-end. More importantly, 85% of mortgages are distributed in tier-one and tier-two cities and net population inflow cities with more stable housing prices and stronger repayment capabilities.
For customer structure optimization, China Citic Bank Corporation Limited focused on high-quality customer segments, with high-score customers accounting for 58% of consumer loans, up 10 percentage points from year-beginning; high-score customers representing 44% of business credit loans, up 9 percentage points; and high-quality customers comprising 82% of new credit card customers, up 10 percentage points year-on-year.
Hu Gang also mentioned that China Citic Bank Corporation Limited's risk control measures continue upgrading: implementing differentiated risk control strategies for mortgages, business, and consumer loans; accelerating model iteration optimization; and raising customer admission standards.
**Accelerating Light Asset Transformation**
Against the backdrop of narrowing margins, banks seeking higher profits must explore new territories—such as "light asset transformation" that relies on fee-based businesses rather than loan scale.
Lu Wei noted that "our bank's light capital transformation showed significant results in 2025," specifically reflected in non-interest income of 34.561 billion yuan, down 5.1% year-on-year. However, excluding credit card business affected by market conditions, fee income from all other major product categories achieved positive growth. Most notably, fee and commission net income—best demonstrating fundamental business capabilities—reached 16.906 billion yuan, up 3.4% year-on-year.
Lu Wei stated: "Our first-half fee and commission net income performance was excellent, with growth rates outpacing peers for five consecutive years, demonstrating significant light capital transformation results."
Breaking down by product, wealth management business continued expanding in the first half. China Citic Bank Corporation Limited's retail AUM has ranked second among peers for four consecutive years, with wealth management scale exceeding 2.1 trillion yuan in the first half, generating 3.2 billion yuan in wealth management income, up 37% year-on-year, ranking first in growth among comparable peers. Agency business income reached 3.1 billion yuan, up 19% year-on-year.
Second, comprehensive financing business continued consolidating competitive advantages. In the first half, the bank maintained market leadership in both volume and number of corporate debt financing instrument underwritings, with bond underwriting net income of 1 billion yuan, up 19% year-on-year. Traditional bank acceptance, guarantee, and letter of credit businesses generated 1.95 billion yuan in income, up 13% year-on-year, also leading peers in both volume and growth.
Third, custody business maintained leading advantages. In the first half of 2025, custody scale exceeded 17.2 trillion yuan, ranking sixth market-wide, generating 1.9 billion yuan in custody and other custody income, up 10% year-on-year.
Fourth, credit cards were affected by market-wide transaction volume contraction, with first-half credit card income of 5.33 billion yuan, down 14%, primarily due to significant declines in card transaction volumes. Lu Wei noted that looking ahead, credit card fee income will continue receiving support from multiple positive factors, including national-level policies promoting domestic demand and consumption expansion, plus industry anti-involution initiatives, all providing support for stable credit card fee income development.
Vice President Xie Zhibin explained that China Citic Bank Corporation Limited's wealth management AUM increments reached historic highs for the period, with wealth management fee and commission income up 10.3% year-on-year, achieving four-year growth highs. These data indicate that China Citic Bank Corporation Limited has achieved steady progress and quality-quantity dual improvement in light capital transformation.
**Optimized Customer and Asset Layout**
Whether defending margins or pursuing light asset transformation, everything ultimately comes down to customers and assets. In the first half of 2025, China Citic Bank Corporation Limited had clear "focus directions" in customer segmentation and asset structure optimization.
Regarding customer base, China Citic Bank Corporation Limited continues adhering to segmented customer management. As of the reporting period, corporate customers totaled 1.34 million, up 62,000 from year-end; retail customers reached 150 million, up 3.33 million from year-end, including 75,000 additional VIP customers and 8,000 additional private banking customers—increments reaching historic highs for the period.
Meanwhile, major asset structure continued optimizing. On one hand, credit deployment increased, with higher-yield general loans up 5.8% from year-end, with their share of total assets rising 1.3 percentage points to 56.6%. On the other hand, higher-yield credit bond allocation increased, with credit bonds' share rising 3.5 percentage points from year-end to 24.7%.
Corporate credit deployment showed "three focuses." Focus on manufacturing: first-half manufacturing loan increments reached 91.2 billion yuan, 66 billion yuan more than the same period last year; focus on "five major articles": technology enterprise loan balances reached 660.6 billion yuan, green loan balances reached 676.7 billion yuan, inclusive small and micro enterprise loan balances reached 630.6 billion yuan, digital economy core industry loan balances reached 229.3 billion yuan, and elderly care industry loan growth reached 26.5%; focus on characteristic scenarios: 53 billion yuan deployed around capital markets, up 65% year-on-year, cross-border RMB loan balances exceeded 70 billion yuan, and supply chain financing cumulative scale reached 656.1 billion yuan, up 41.23% year-on-year.
Vice President Gu Lingyun explained: "In the first half, our bank's newly originated RMB general corporate loan pricing reached 3.35%, with corporate loan increments of 296.8 billion yuan—a historic high for the period. Notably, this business maintains excellent asset quality—as of first-half end, RMB general corporate loan NPL ratio was 1.01%, continuing to decline from last year's level."
**"Structure-First" Long-termism**
Facing persistent challenges in the low interest rate era, China Citic Bank Corporation Limited clearly outlined its future development path at the results conference. President Lu Wei stated: "We will continue following the structure-first approach determined at year-beginning, fully optimizing asset-liability structure."
Reading through China Citic Bank Corporation Limited's 2025 interim report, the core logic of "structure-first" becomes apparent—abandoning blind pursuit of scale in favor of optimizing asset-liability structure, customer structure, and business structure to achieve growth balancing efficiency and quality. This transformation represents both a realistic response to industry margin compression and rising NPLs, and long-term strategic thinking for banks transitioning from scale-driven to value-driven models.
Judging by results, China Citic Bank Corporation Limited's adjustments are showing initial success: steady profit growth, industry-leading margin defense, stable asset quality, and non-interest income becoming a new engine. However, challenges remain—banking industry margins may continue narrowing, retail NPL resolution requires time, and light asset transformation needs sustained investment.
Nevertheless, against the backdrop of industry-wide challenges, China Citic Bank Corporation Limited's interim results performance offers an alternative development approach: scale is not the goal—quality is key.