Banking Sector Total Assets Reach RMB498 Trillion in H1; Net Profit Down 0.6%, NIM Rebounds to 1.41% in Q2

The National Financial Regulatory Administration disclosed on August 14 the main regulatory indicators for commercial banks in the second quarter of 2026. Data show that total assets of banking financial institutions reached RMB498 trillion in the first half of the year, up 7.48% year on year. Net profit amounted to RMB1.2 trillion, down 0.6% year on year, with the decline narrowing by 3.1 percentage points from the first quarter. The net interest margin (NIM) of commercial banks stood at 1.41% in the second quarter, up 1 basis point from the historical low of 1.40% in the first quarter, marking the first quarter-on-quarter rebound since Q1 2022. At the end of 2021, the banking sector's NIM was 2.08%; it had been declining continuously since 2022, falling to 1.40% in Q1 2026.

By bank type, NIM trends diverged in Q2. The NIMs of large state-owned banks, city commercial banks, private banks, and rural commercial banks each rose by 2 basis points, 2 basis points, 1 basis point, and 1 basis point, respectively, from Q1. Joint-stock banks held steady quarter on quarter, while foreign banks saw a 2 basis point decline. In the first half, net profit of large state-owned banks grew 1.6% year on year, city commercial banks rose 7.4%, joint-stock banks fell 3.4%, and rural commercial banks dropped 12.5%. In Q2, the NIMs were 1.31% for large state-owned banks, 1.40% for city commercial banks, 1.54% for joint-stock banks, and 1.59% for rural commercial banks.

On asset quality, at the end of Q2, the non-performing loan (NPL) balance of commercial banks stood at RMB3.7 trillion, up RMB52.3 billion from the end of the previous quarter. The NPL ratio was 1.52%, up 0.01 percentage point quarter on quarter, rising slightly for two consecutive quarters. The share of special-mention loans was 2.21%, up 4 basis points from Q1; the combined ratio of NPLs and special-mention loans was 3.73%, up 5 basis points from Q1. The provision coverage ratio was 203%, unchanged from the end of Q1. By type, the NPL ratio of large state-owned banks was 1.21%, down 1 basis point from Q1; joint-stock banks stood at 1.23%, up 1 basis point; city commercial banks rose to 1.87%, up 2 basis points; and rural commercial banks climbed to 2.83%, up 4 basis points. At the end of Q2, total assets of the industry grew 7.5% year on year, with the growth rate slowing 1.4 percentage points from the previous quarter.