25 A-Share Banks See Yielding Asset Returns Below 3% in H1 2026

In the first half of 2026, 25 A-share listed banks saw their returns on interest-bearing assets fall below 3%, representing about 60% of the sector. No such banks existed before 2024; six breached the threshold in the first half of 2025, and 11 for the full year of 2025. By the first half of 2026, no bank recorded a return above 4% on interest-bearing assets. These returns have declined in a stepwise manner, averaging about 5.5% from 2005 to 2014, 4.5% from 2014 to 2020, and accelerating downward after 2021.

On funds placed with the central bank, the required reserve ratio yields 1.62%, while the excess reserve rate stands at 0.35%. Loans and financial investments constitute the main interest-bearing assets, and their yields determine the overall level. The 10-year government bond yield has fallen from 3.3% at the start of 2021 to 1.7% currently, a decline of 150 basis points. New lending rates have dropped from 5.1% to 3.05%, a decrease of 205 basis points. In the first half of 2026, most financial investment yields were below 2.5%, with some below 2%.

Retail loan yields exceed corporate loan yields. For example, China Merchants Bank reported a retail loan yield of 3.7% versus a corporate loan yield of 2.59%. Within retail lending, mortgage rates are no lower than 3%, while consumer and business loans carry higher rates. Corporate lending rates are lower due to market competition and cheaper bond financing. The six largest state-owned banks have relatively low returns on interest-bearing assets; all six that fell below 3% in the first half of 2025 were major state-owned banks, a trend that continued into 2026. Among them, ICBC recorded the lowest at 2.49%, with the other five around 2.6%. City commercial banks such as Bank of Xi'an, Bank of Guiyang, and Bank of Changsha reported higher returns, with corporate loan yields around 4%. Changshu Bank posted the highest overall return at 3.94%, supported by a large retail loan portfolio yielding 6.09%, with an average loan balance per customer below RMB 500,000.

At a results briefing, Zheshang Bank President Lv Linhua said the share of assets yielding below 1.2% had been reduced by 7 percentage points in the first half. Bill asset yields have fallen to around 1.2%, making bill business loss-making for commercial banks. The bill discount balances of the four largest state-owned banks roughly doubled between 2024 and the end of June 2026, as these banks are required to sustain credit growth. Bill discounting provides funding support to enterprises and lowers financing costs.