"Two years of 'scraping the bone,' Ping An Bank vows to return to growth."

The Ping An Bank 2025 annual results conference, which attracted over 210,000 viewers, was imbued with a complex mix of caution and expectation.

After two and a half years of strategic transformation, President Ji Guangheng set the tone for the bank’s interim achievements in his opening remarks, candidly stating that "the dawn at the end of the tunnel is now visible."

At the new starting point of the launch of the "15th Five-Year Plan," this financial institution, once known for its explosive growth, is striving to prove its resilience in weathering cycles to the capital market.

Management has clearly defined 2026 as the critical year for the reform and transformation to take effect, and has thrown out the business goal of "returning to growth."

However, the financial disclosures under the spotlight still reflect the chill of deep water in the transformation.

Affected by changes in market interest rates and business structure adjustments, Ping An Bank recorded operating income of RMB 131.442 billion in 2025, down 10.4% year-on-year, and net profit attributable to shareholders of RMB 42.633 billion, down 4.2% year-on-year.

This is the second consecutive year of decline in both revenue and net profit, following 2024.

Now that management has publicly declared that the downsizing of high-risk assets is nearing completion, market attention is more focused on this report:

With the formerly excessive net interest margin gradually smoothed out by the macroeconomic cycle and the disintegration of old high-yield models, how will this joint-stock commercial bank fill the huge revenue gap, and through what path will it fulfill its "return to growth" strategic commitment?

Successfully Stemming the Bleeding

At the results conference, management admitted that in recent years Ping An Bank has proactively digested high-risk assets and decisively exited from high-risk customer groups. This painful asset “ectomy” has now basically been completed.

A deep asset structure reshuffling can clearly be observed within the balance sheet.

As the absolute main battleground of this “scraping bone to remove poison,” the credit card business—which used to drive high returns but came under frequent pressure amid economic cycles—has now been firmly suppressed.

As of the end of 2025, Ping An Bank’s credit card receivables balance fell to RMB 405.442 billion, shrinking 6.8% from last year; meanwhile, to consolidate the basic foundation of retail assets, low-risk mortgage loans expanded against the trend, reaching RMB 355.148 billion, up 8.9% from the previous year, and newly issued personal new energy vehicle loans soared 13.9% year-on-year to RMB 72.626 billion.

The defensive strategy of proactively lowering risk preference has led to visible improvements in asset quality.

By the end of 2025, Ping An Bank’s personal loan non-performing ratio fell significantly, from 1.39% at the end of last year to 1.23%. Among them, the former high-risk point—credit cards—had its non-performing ratio slashed by 0.53 percentage points from its 2024 peak, down to 2.24%; mortgage loans, as the ballast, further optimized to a non-performing ratio of 0.25%.

The improvement in core risk control indicators confirms the management’s "mine-clearing" effectiveness on the asset side, and this warm trend in asset quality has subtly rippled through the profit and loss statement.

In 2025, Ping An Bank’s retail financial business net profit reached RMB 2.683 billion, compared to just RMB 289 million in the cold trough of 2024, marking an astonishing recovery in net profit for the retail segment.

Upon closer examination, the warming profit figures are not due to a substantive recovery of front-end revenue generation capability.

In 2025, Ping An Bank’s retail business revenue continued to suffer, dropping 13.5% year-on-year to RMB 61.626 billion, with its contribution to total revenue falling 1.7 percentage points to 46.9%.

This “falling revenue but rising profit” magic is rooted in the bank’s provisioning adjustment mechanism.

From a holistic perspective, benefiting from the accelerated clearing of high-risk assets, the overall non-performing loan generation rate fell by 0.17 percentage points year-on-year. The stabilization of asset quality objectively relieved the burden of continued heavy provisioning for the bank.

Specifically in the retail segment, Ping An Bank recognized RMB 37.576 billion in credit and asset impairment losses in 2025, a sharp reduction of 22.9% from RMB 48.729 billion in 2024. This means the retail segment made provisions for more than RMB 11.1 billion less in impairment losses in 2025, and this significantly reduced provisioning directly “fed back” to support the restoration of net profit.

However, the retail segment’s consumption of impairment resources remains at a high absolute level.

In 2025, impairment resources consumed by the retail segment made up 92.6% of the bank’s total, down slightly from 98.6% last year, but still responsible for the lion’s share of provisioning.

This means retail bad debts are still heavily consuming resources;

But from a positive perspective, once the quality of underlying retail assets is firmly established in the future and the provisioning rate is further reduced, Ping An Bank’s “reservoir” of provisioning funds that feed profit will remain considerable.

Breakdown of Momentum

If provisioning is the buffer for profits, net interest margin is the core moat for commercial bank earnings—and this is Ping An Bank’s biggest current challenge.

Over time, Ping An Bank’s annual net interest margin fell from a 2021 peak of 2.79% all the way down to 1.78% in 2025. This 101 basis point plunge is due not only to macro environment and LPR repricing, but more fundamentally to a radical shift in the bank’s micro strategy.

Looking back, Ping An and CMB used to be the “dual heroes” of net interest margin among joint-stock banks. Unlike CMB, which relies on a low-cost funding moat, Ping An Bank, in its 2016 retail transformation, forged a risky path by boosting net interest margin through high asset pricing.

However, high pricing covering high risk inevitably faces backlash in cyclical headwinds. As credit card and consumer loan non-performing rates surged to 2.77% and 1.23% respectively in 2023, the risk of Ping An Bank’s underlying assets was rapidly exposed.

The current sharp drop in net interest margin is the painful correction of previous aggressive expansion.

To safeguard the risk bottom line, Ping An Bank began allocating credit resources towards medium- and low-yield safe assets, and continual defensive moves brought the 2025 average loan yield down to 3.87%, a significant decrease of 67 basis points year-on-year.

The rapid drop in asset-side yield urgently needs to be offset by falling funding costs.

Although Ping An Bank worked hard to optimize the structure—cutting the personal deposit interest rate by 34 basis points to 1.82% in 2025—the main challenge is that its capacity to secure low-cost funds has hit a growth bottleneck: at year-end 2025, total personal deposits remained at RMB 1.28 trillion, basically unchanged from last year.

This means that after abandoning a price-war strategy for gathering deposits, the bank’s retail funds have entered a plateau stage.

On one side is the steep drop in asset yields, on the other is the relatively rigid cost of funds;

The intense friction between the two not only erased the previous net interest margin advantage, but forms the underlying logic of the double-digit revenue decline.

Simultaneous with this pressure on traditional net interest margin business, there’s a stage-wise decline in intermediary business.

With industry-wide net interest margin contraction, “big wealth management” was once expected to boost non-interest income and smooth out cyclical fluctuations, but now, the bank’s net fee and commission income has fallen steadily from a 2021 peak of RMB 33.062 billion to RMB 23.894 billion in 2025.

Though relying on Ping An Group’s comprehensive financial ecosystem, its agency personal insurance income rose a striking 53.3% in 2025 to RMB 1.292 billion. But this incremental growth is insufficient to entirely offset declines in agency funds, wealth management, and other segments.

This not only highlights the difficulty in wealth management transformation, but also means its agency capabilities, investment research base, and deep client trust cultivation still require the long-term process of weathering both bull and bear markets.

As traditional profit engines decline in momentum, the management revealed new business levers during the conference.

After resolutely withdrawing from old high-risk, high-return product lines, Ping An Bank is trying to establish a new asset base—the “mid-risk, mid-return” products represented by Cheng e Loan and Chengye Loan have now exceeded RMB 30 billion in scale, with good asset quality.

This signifies Ping An Bank’s effort to explore a more stable middle ground on the balance beam of risk and return.

Yet in terms of volume, a mere RMB 30 billion in new scale still accounts for a very small proportion of the massive RMB 1.72 trillion personal loan portfolio.

In the past, this bank’s profit system essentially depended on the huge scale effect of high-yield credit assets; now, for medium-yield products to quickly fill the revenue black hole left by the large-scale shrinkage of old high-interest assets, it still faces tremendous scaling pressure in the short term.

Growth Projections

Faced with the dramatic gap in momentum between old and new, “returning to growth” has become a high-frequency term among management at Ping An Bank’s results conference. President Ji Guangheng even called out to the market, insisting “the toughest times are over.”

Amidst the cold winter of industry-wide revenue pressure, to boldly throw out the card of stabilization and reversal, management isn’t just acting on passion—there’s a set of rigorous financial and business projections behind it.

The primary logic supporting management’s bullishness for 2026 lies in the clearance of drag factors.

With high-risk retail asset downsizing entering its final stage, the aggressive “bloodletting” of proactive balance sheet contraction will come to a halt in 2026; coupled with the continued reduction in retail credit impairment losses, two consecutive years of results decline have objectively dug an extremely low financial base.

So long as the pace of scale expansion remains steady in the future, even marginal improvements can translate to positive growth in the financial statements.

Secondly, there’s the expectation of net interest margin recovery from lowering funding costs.

Although total deposit absorption rose only 1.4% over last year, Ping An Bank’s average deposit interest rate in 2025 dropped 42 basis points year-on-year, ranking among the top reductions at joint-stock banks, which will provide support for net interest margin recovery and revenue stabilization.

More fundamentally, the strategic support comes from the strong compensation by corporate business and “corporate-retail synergy.”

Faced with the pain of shifting old and new growth dynamics, management’s breakthrough strategy, revealed at the results conference, is to leverage more than twenty years of deep supply chain finance experience, utilize corporate-retail linkage, and intensively cultivate upstream and downstream customer groups in industry chains.

Financial reports confirm the accelerated implementation of this strategy: in 2025, Ping An Bank’s ordinary corporate loans grew 9.2%, and the number of corporate clients soared 13.2% against the trend.

With an annual supply chain financing volume as high as RMB 1.96 trillion, Ping An Bank is converting this deep moat into a “door-knocker” for bulk customer acquisition. Its core plan: through real transaction scenarios, precisely lock in corporate clients, then use payroll agency, wealth management, and other business loops to feed back to the C-end retail side, attempting to re-establish a positive loop of “volume, price, risk.”

Yet beneath the optimistic growth picture, there remain several real variables deep within Ping An Bank’s balance sheet that must be handled with caution.

First is the migration pressure of underlying credit assets.

While the overall non-performing ratio held static at 1.05% at the end of 2025, leading indicators have sounded alarms. The migration rate of Ping An Bank’s special-mention loans hit 48.25% in 2025, with nearly half deteriorating further, meaning that in the macroeconomic transition, businesses and individuals’ repayment capabilities remain fragile.

Second, the basic corporate business, acting as the “covering force,” is facing cyclical pressure tests.

During the pain period of retail transformation, corporate business charged ahead to support the overall scale.

But due to industry cycle adjustments, Ping An Bank’s corporate loan non-performing ratio rose to 0.87% in 2025, with corporate real estate loans surging by 0.43 percentage points, reaching 2.22%. The strategic corporate-retail linkage must be built on sound asset quality, which places extreme requirements on overall risk control.

Third, future profit adjustment space is limited.

During two years of revenue pressure, Ping An Bank smoothed profit fluctuations by “lowering impairment loss provisions," at the cost of a sharp drop in the provision coverage ratio by nearly 30 percentage points to 220.88% at year-end 2025.

Objectively, this matches risk-clearing period operations, but the thinning of the safety cushion is a fact.

If credit demand fails to rebound as expected in 2026 and revenue does not substantially improve, the bank’s “financial engineering” room for profit adjustments through provisioning is no longer ample, and the profit statement will face real tests.

To summarize, from a financial logic perspective, thanks to extremely low base effects, sharply reduced funding costs, and a light balance sheet, Ping An Bank is highly likely to achieve “moderate numerical recovery” on its 2026 financial statements; management’s optimism has a genuine financial foundation.

But that is just an escape from the ICU.

For Ping An Bank, the true long-term test is: as the era of ultra-high net interest margins becomes history, the old engine is dismantled and new momentum is still nascent, this once runaway “dark horse” in the retail track must, in a more competitive and smoother industry new normal, prove again that it not only can "scrape bone to remove poison," but also possesses robust and refined self-renewal genetic capabilities.

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