China Merchant Bank profit rebounds in Q2 on lower costs

Net profit grew 2.7% in Q2 from a 2.1% decline in Q1.

China Merchant Bank (CMB) returned to positive earnings growth in Q2 2025 after a decline the previous quarter.

Net profit grew 2.7% year-on-year to $5.26b (CNY37.6b) in Q2, reversing the 2.1% decline in Q1, noted UOB Kay Hian in its latest report on the bank. Growth was due to lower credit cost— a 9-basis point (bp) decline year-on-year— and lower tax.

However, the bank still faced a net interest margin (NIM) decline that was larger than its peers, said UOBKH analyst Kenny Lim Yong Hui.

“Management highlighted that CMB is under greater NIM pressure than its peers, as its already low deposit costs leave limited room for further funding cost reduction, while mortgage repricing and subdued retail loan demand are weighing on loan yields,” Lim said.

Lim noted that CMB management expects that consumption-boosting measures and the anti-involution policy will help stabilise and improve loan yields going forward.

CMB also saw muted fee income and lower bond trading income during the quarter.

Fee income came weaker than expected, recording a 1.2% year-on-year decline in Q2 as bank card fees fell 25% year-on-year on lower transaction value. Bank card fees accounts for 36% of CMB’s total gross fee income.

Weakness was offset by a 13.6% increase in wealth management fees and a 4% gain in asset management fees,

Loan growth was 5.5% YoY and lower by 1.1% compared to Q1 on sluggish loan demand.

(US$1 = CNY7.14; as of 5 September 2025, Morningstar from Google)