
Chinese banks’ interest margins to compress up to 18 basis points in 2025
State-owned banks’ fee income growth is likely to be steady through 2029.
Chinese banks are expected to see net interest margins (NIM) to compress by up to 18 basis points(bp) in 2025.
NIMs are expected to compress between 10- to 18-basis points in 2025, consistent with the 8- to 18-bp decline reported by banks in the first half of 2025, according to Morningstar Equity Research.
“We expect margins to stabilize in the second half, helped by deposit rate cuts and anti-involution policies to curb excessive pricing competition,” it stated in an October 2025 report.
For state-owned banks, fee income growth should remain steady through 2029, partly driven by the gradual recovery in business activities and a pick-up in online and offline card spending.
State-owned banks’ first half fee income growth reportedly beat Morningstar’s expectations, rebounding to 4% year-on-year, on a recovery in their wealth management business.