During the first half of this year, the banking sector's net interest margin and profit growth both signaled a crucial trend toward stabilization. However, as economic momentum shifts and the financial structure evolves, balance sheet expansion is slowing, fundamentally transforming the future growth narrative for the industry. A recent report indicates that global banking is entering an era of "precision acceleration," yet the operational improvements among Chinese banks are far from a uniform recovery—net profit growth rates among listed banks varied by nearly 42 percentage points between the fastest- and slowest-growing institutions in the first six months of 2026, with large commercial banks, joint-stock banks, city commercial banks, and rural commercial banks all displaying divergent profit trajectories.

One significant trend is the industry's accelerated pivot toward "light-capital, fee-based income" models. Nevertheless, based on interim reports, despite a buoyant capital market and deepening "deposit migration" patterns, the proportion of fee-based income to total revenue among listed banks paradoxically declined in the first half, with notable divergence among institutions. For instance, Bank of Ningbo saw its net fee and commission income surge nearly 54% year-on-year in the first six months, while Bank of Xi'an recorded a decline exceeding 42%.

Improving Operations, Yet Widening Disparities: Growth Logic Shifts to Value Creation

Financial data reveals that out of 42 A-share listed banks, 36 achieved positive revenue growth in the first half of this year—six more than in the same period last year. Concurrently, 36 banks posted growth in net profit attributable to shareholders, an increase of three compared to last year. Relative to the previous year's growth rates, 31 banks improved their revenue growth, while 23 banks saw better net profit growth. Specifically, 10 listed banks, including Xiamen Bank (19.6%), Bank of Suzhou, and Huaxia Bank, recorded double-digit revenue growth, a sharp rise from just three banks in the prior-year period. Five banks, including Bank of Qingdao (18.08%), Qilu Bank, and Bank of Ningbo, exceeded 10% growth in net profit. In stark contrast, the steepest decline in net profit last year was -7.95% (at Huaxia Bank), but this year the lowest figure dropped to -24.01% (China Everbright Bank).

Amid overall improvements but intensifying divergence, a pressing question for the market is whether the banking sector has truly achieved comprehensive stabilization. "Rather than simply assessing whether the industry has bottomed out, what deserves more attention is the shift in the growth logic of Chinese banking. Future competition will hinge less on scale and more on the ability to create value," noted a senior partner. He added that China's vast customer base, ample savings resources, and world-leading digital capabilities are advantages that also offer Chinese banks a unique path distinct from European and U.S. markets. Institutions that effectively integrate technology, customer insight, wealth management, and international services are poised to stand out in the next competitive cycle.

Earnings reports and investor briefings indicate that while net interest margins have shown signs of stabilizing, the tailwind from maturing time deposits is expected to fade, keeping pressure on margins that have already sunk to historic lows. In this context, comprehensive service capabilities and diversified revenue streams are gaining prominence. For example, the president of ICBC highlighted that the bank is accelerating its pivot away from traditional credit-driven growth toward a diversified, international, and digitally empowered model, driven by rising contributions from non-interest income and overseas subsidiaries. Similarly, the president of Agricultural Bank of China emphasized that structural economic shifts, financial evolution, and rapid AI adoption will profoundly impact operations, prompting the bank to adjust its credit mix and broaden profit channels.

Wealth Management Emerges as a Growth Engine, Yet Fee Income Ratio Faces Near-Term Headwinds

As market interest rates continue to decline, competition in the wealth management arena—now a fiercely contested battleground—has intensified, with the industry's focus shifting from deposit accumulation to growing assets under management. "China's total personal financial assets expanded from 114 trillion yuan in 2015 to 326 trillion yuan in 2025. Meanwhile, residents' non-deposit financial assets are steadily rising, deepening the 'deposit migration' trend. Some leading banks saw wealth management fee income grow nearly 30% year-on-year in the first half of 2026, reflecting sustained demand for asset allocation," according to industry analysis. Entering a new phase, wealth management is transitioning to a "true demand era," becoming a vital engine for banks' growth transformation.

However, by scale and share, the data tells a nuanced story. In the first half, 42 listed banks generated net interest income and net fee and commission income of 2,223.12 billion yuan and 413.969 billion yuan, respectively, accounting for 70.78% and 13.18% of total revenue—compared to 70.16% and 14% in the same period last year. A senior expert pointed out that while international experience suggests wealth management has the potential to become a second growth curve, its resilience means it won't fill the gap from margin compression overnight; instead, it will deliver steady, incremental growth over time.

Divergent Fee Income Performance: Banks Carve Distinct Paths

In the first half, 26 listed banks posted year-on-year growth in net fee and commission income, with 10 achieving double-digit increases. Leading the pack were Bank of Ningbo (53.9%), Changshu Bank (39.15%), and Bank of Qingdao (32.66%). Among the remaining 16 banks with declining fee income, Bank of Xi'an suffered the steepest drop of over 40%. Among the large state-owned banks, China Construction Bank and Agricultural Bank of China saw their net fee and commission income fall by 1.42% and 8.71%, respectively, while Postal Savings Bank of China continued to post double-digit growth, and ICBC grew by 3.3%. In the joint-stock bank category, China Everbright Bank and Shanghai Pudong Development Bank both recorded declines.

Breaking down the drivers, banks are focusing on different levers. Bank of Ningbo's fee income jumped 57.92%, propelled by wealth distribution and asset management fees. Bank of Qingdao increased its fee income share by 2.27 percentage points to 12.81%, citing a deeper push into light-capital transformation through wealth management, transaction banking, and bond underwriting. Notably, most banks' fee declines were not linked to distribution businesses. At Shanghai Pudong Development Bank, the drop was driven by lower income from bank cards, investment banking, and settlement services. China Everbright Bank attributed its decline to reduced bank card service fees, while Bank of Xi'an saw across-the-board dips in agency, trust, guarantee, card, clearing, underwriting, and advisory services.

Among the large banks, ICBC grew its corporate wealth management fee income by 1.697 billion yuan and personal wealth management and private banking income by 1.467 billion yuan, thanks to higher revenue from precious metals, funds, and wealth products. Agricultural Bank of China achieved positive fee income growth after excluding a one-time high base from prior-year wealth management products, with custody and other trust services up 11.5% and settlement and clearing up 3.9%. Bank of China ramped up efforts in wealth management and asset custody, driving solid growth in custody, trust, settlement, and clearing fees. China Construction Bank saw agency business fees climb 18.73% to 11.209 billion yuan, mainly from faster growth in fund and wealth product distribution. Bank of Communications increased agency business income by 638 million yuan, up 27.7%, with robust gains in fund and trust distribution. Postal Savings Bank of China reported strong growth across segments: investment banking fees up 16.41% to 4.2 billion yuan, wealth management fees up 36.66% to 3.743 billion yuan, custody fees up 10.13% to 772 million yuan, and other fees up 34.69% to 3.036 billion yuan, driven largely by supply chain financing.

"The continuous growth of Chinese residents' wealth and the gradual diversification of asset allocation mean clients no longer seek single products but comprehensive wealth solutions tailored to different life stages, risk appetites, and family goals. Future-leading wealth managers will deliver sustainable value through a blend of online-offline advisory services, open product platforms, and AI-driven efficiency and experience enhancements," noted a partner.