World's largest lender expects NIM decline to reach 'inflection point'

Industrial and Commercial Bank of China Ltd. expects its interest margin to reach an inflection point as interest rates stabilize.

For the first three quarters of 2025, Industrial and Commercial Bank of China (ICBC) reported a year-over-year decrease of 0.7% in net interest income to 473 billion yuan, with net interest margin (NIM) at 1.28% ― down just 2 basis points from three months ago and 15 bps from a year ago, according to the lender's Oct. 30 results release. Loans grew 7.3% in the same period, the world's biggest lender by assets said.

"Overall, the downward trend in both corporate and retail loan rates has moderated ... and NIM will gradually reach an inflection point," said Fu Ji, vice director of the bank's assets and liability management department, during the results call.

"Regulators have recognized the continuous NIM compression, and the People's Bank of China has recently emphasized the need to balance supporting the economy with maintaining the financial sector's health," Fu said, adding. "We have already seen marginal improvement with a smaller NIM decline so far this year."

Stable economy

As China stays on track with its 2025 GDP growth target of about 5%, the central bank has kept policy rates unchanged after bringing benchmark loan prime rates to all-time lows in May, easing pressures on commercial banks' NIMs.

As of the end of the second quarter, the aggregate NIM of China's large commercial banks was 1.31%, 2 bps lower than three months ago, according to The National Financial Regulatory Administration. This compared with 1.44% six months ago and 1.46% a year earlier.

"China's banks are facing a new dilemma in weaker profitability, lower NIM and slower asset growth since 2022," Natixis Corporate & Investment Banking said in an Oct.15 report, adding "loan growth remains weak."

As at the end of the third quarter, ICBC's nonperforming loan ratio stood at 1.33%, unchanged from three months ago and 2 basis points lower than a year ago, according to the release, while the allowance to nonperforming loans increased slightly.

ICBC reported a net profit of 270 billion yuan for the first nine months of 2025, a year-over-year increase of 0.3%, according to its release.

As of Oct. 30, US$1 was equivalent to 7.11 Chinese yuan.