The semi-annual reports of listed banks have concluded, with the 42 listed banks (A-share listed banks, same below) collectively achieving a total operating income of 2.89 trillion yuan and a net profit attributable to the parent company of 1.09 trillion yuan. Alongside the disclosure of their operational status and profitability in the semi-annual reports, the net interest margin performance of various listed banks, which is highly scrutinized by the industry, has also been revealed. According to Wind data statistics, among the 42 listed banks in the first half of the year, the net interest margin of 2 banks increased compared to the beginning of the year, while the other 40 banks experienced a decline to varying degrees. Against this backdrop, several banks have indicated that they will focus on reducing liability costs, expanding asset scale, optimizing customer and asset structures, and other measures in the second half of the year to ensure the stability of the interest margin level.

Net interest margin of 40 listed banks narrows compared to the beginning of the year

Interest net income increase "12 positive, 30 negative"

As the semi-annual performance of listed banks is "handed in," the much-anticipated net interest margin performance is also disclosed.

According to Wind data statistics, among the 42 A-share listed banks in the first half of the year, the net interest margin of 40 banks narrowed compared to the beginning of the year, with a decline ranging from 1 to 42 basis points. Only 2 listed banks saw a slight increase in their net interest margin compared to the end of the previous year, namely Bank of Communications with a slight increase of 1 basis point, and Lanzhou Bank with an increase of 13 basis points, with their net interest margins at 1.29% and 1.59%, respectively.

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Additionally, according to data released by the National Financial Regulatory Administration, the net interest margin of commercial banks in the second quarter of this year was 1.54%, unchanged from the first quarter. Compared to the industry average for the same period, a total of 26 listed banks had net interest margin indicators above or equal to this figure, while the remaining 16 banks had net interest margins below the industry average at the end of the second quarter.

Changshu Bank, Changsha Bank, and China Merchants Bank were the only three listed banks that maintained a net interest margin above 2% in the first half of the year, with corresponding values of 2.79%, 2.12%, and 2%, respectively. Banks with a net interest margin below 2% but above 1.9% include Nanjing Bank, Ping An Bank, Postal Savings Bank of China, and Jiangsu Bank. Furthermore, Ningbo Bank, Industrial Bank, China Zheshang Bank, Guiyang Bank, and Zhengzhou Bank maintained a net interest margin of 1.8% or above.

In response to the trend of net interest margins in the first half of the year, the reasons given by various banks in their semi-annual reports mainly focused on the following points: First, the reduction of existing mortgage loan interest rates, the decline of LPR (Loan Prime Rate) combined with changes in credit demand, leading to a weakening of interest-bearing asset returns; second, the continuous downward trend of market interest rates, driving the continued decline in the yield of market-oriented assets such as bond investments and bill discounting; third, the overall growth of deposit scale and the trend of deposit termization leading to an increase in rigid expenditures.

Industrial and Commercial Bank of China, which ranks first among listed banks in both operating income and net profit attributable to the parent company, stated in its semi-annual report that affected by factors such as the reduction of Loan Prime Rate (LPR), the adjustment of existing mortgage loan interest rates, and changes in the maturity structure of deposits, the annualized net interest margin and net interest income rate were 1.24% and 1.43%, respectively, down by 28 and 29 basis points year-on-year.

The level of net interest margin is closely related to net interest income. How did the net interest income of listed banks perform in the first half of the year? According to Wind data statistics, the net interest income of the 42 A-share listed banks in the first half of the year was approximately 2.08 trillion yuan. Looking at the scale of net interest income from individual banks, the leading effect of state-owned large banks and the top national joint-stock banks is evident.Specifically, ICBC ranked first among listed banks with a net interest income of 313.95 billion yuan, and it is also the only bank whose net interest income exceeded the 300 billion threshold in the first half of the year. Following are CCB, ABC, and BOC, with net interest incomes of 296.059 billion yuan, 290.848 billion yuan, and 226.76 billion yuan, respectively. PSBC and China Merchants Bank also had net interest incomes exceeding 100 billion, with 142.876 billion yuan and 104.449 billion yuan, respectively.

At the same time, the trend of narrowing net interest margins is also reflected in the growth levels of net interest income of various banks. In the first half of the year, the growth rate of net interest income of listed banks showed a "12 positive 30 negative" trend, among which Ningbo Bank's net interest income increased by 14.75% year-on-year to 23.154 billion yuan, and it is also the only listed bank with double-digit growth in net interest income in the first half of the year. Ping An Bank's net interest income fell significantly, with a year-on-year decrease of 21.63 percentage points in the first half of the year. Another 7 banks showed double-digit declines.

In the first half of the year, net interest income is still the most important part of the operating income of listed banks. Except for Nanjing Bank, the net interest income of the remaining 41 banks accounted for more than 60% of the operating income. Changshu Bank, Zhengzhou Bank, Lanzhou Bank, Zijin Bank, and PSBC accounted for more than 80%, with the proportion of net interest income to revenue reaching 83.58%, 82.83%, 82.53%, 81.60%, and 80.82%, respectively.

The pressure on interest margins still exists in the second quarter but has slowed down.

In the second half of the year, efforts will be made on both the asset and liability sides.

In the semi-annual performance briefings of various listed banks, the performance and future trend of interest margins in the first half of the year are also a focus of widespread concern. In the view of banking industry insiders, the overall interest margin of the banking industry was under pressure in the first half of the year, but there was a marginal improvement in the second quarter, and they remain optimistic about the future trend of net interest margins.

Peng Jiawen, the vice president of China Merchants Bank, pointed out at the performance exchange meeting that the pressure of interest margin contraction in banks still exists, but the pressure has been somewhat reduced on the margin. He believes that looking at next year, the interest margin of banks may gradually stabilize.

"Looking at the overall situation of the industry in the first half of the year, the trend of rapid decline in interest margins has slowed down, and there are signs of marginal improvement." Xu Xue Ming, the vice president of PSBC, also said in response to questions about interest margins at the performance briefing that overall, the next step in interest margins still faces pressure, but the trend of slowing down is expected to continue.

Wang Zhiheng, the president of ABC, also proposed at the performance briefing that the next step in interest margin trends, we believe, will generally remain stable. At the same time, Wang Zhiheng believes that under the background of increasing the support of finance for the real economy and promoting the overall financing cost of society to be stable and slightly lower, there is still downward pressure on the loan interest rate, coupled with the overall low operation of the bond market interest rates, and the interest rate on the asset side will continue to be under pressure. ABC will strive to achieve reasonable growth in credit scale and continuous optimization of structure and quality.

In response to the trend of net interest margins, various banks have also stated their own strategies. Efforts will be made on both the asset and liability sides to achieve growth or optimization in scale, structure, and quality.China Merchants Bank stated in its semi-annual report that it will take a multi-faceted approach to promote the reasonable and steady operation of the net interest margin. Specifically, on the asset side, the bank will continue to increase the organization of effective assets, optimize the business and customer group structure on the basis of promoting a steady increase in credit scale, and focus on optimizing the structure of major asset classes, strengthening the portfolio allocation of bills, bonds, interbank assets, etc., to maintain a reasonable level of asset returns. On the liability side, the bank will adhere to the growth of low-cost core deposits as the main focus, expand the sources of low-cost, high-quality deposits, seize the policy opportunities of the continuous deepening of deposit rate marketization, promote the stability and decline of deposit costs, and at the same time, look ahead to the trend of market interest rates, strengthen the portfolio management of liabilities, and consolidate the overall cost advantage of liabilities.

Public information shows that the management of China Minsheng Bank stated at the performance release that they will also take a multi-faceted approach to stabilize the net interest spread in the second half of the year, striving to maintain a stable operation of the net interest spread within the year. The specific work will be carried out in the following aspects: First, taking the control of liability costs as the main focus, and focusing on controlling the interest-bearing rate of liabilities is the key point of work for the second half of the year. One is to expand the sources of stable low-cost deposits while managing the maturity of existing high-cost deposits. Reduce the proportion of high-cost deposits. Secondly, in combination with market changes, raise funds through multiple channels, and reduce liability costs by promoting the issuance of interbank certificates of deposit and bonds.

On the asset side, continue to optimize the asset structure and focus on alleviating the downward pressure on asset returns. One is to increase the proportion of credit assets. According to market conditions and the potential advantages of China Minsheng Bank, focus on key businesses and strive to promote the growth of high-quality assets. The second is to increase the adjustment of the customer structure, refine customer selection and stratified management, improve risk pricing capabilities, and enhance comprehensive returns.