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Themis Qi

Chinese banks are expected to benefit from a resilient domestic economy and easing China-US ties following US President Donald Trump’s visit, though loan quality remains under pressure from export and property risks, according to industry experts.
Mainland lenders’ net interest margins (NIM) remained flat in the first quarter of 2026, reflecting stabilisation after six consecutive years of decline to an average of 1.4 per cent in 2025, according to Ernst & Young (EY).
Of 25 listed banks that reported results, 11 posted year-on-year increases in NIM and three were stable, according to Benny Cheung, EY Greater China financial services China South markets leader. He said many institutions had yet to release their full first-quarter reports.
Cindy Keung, an economist at OCBC Hong Kong, said the likelihood of the People’s Bank of China (PBOC) cutting interest rates in the near term was low, given expectations of continued resilience in the mainland economy.
China’s leadership in new energy technology and substantial energy reserves had reduced its sensitivity to energy shocks from Middle East conflicts, providing a key support pillar for banks, Keung said.

“Despite uncertainties [in external demand], we see that China holds an ‘edge’ in the overall situation,” Keung told the South China Morning Post at an event on Friday. “Furthermore, the lack of expectation for rate cuts is a positive for banks.”
With China-US relations appearing to enter a period of strategic stability, Keung said there was a high probability China would meet its annual growth target of 4.5 to 5 per cent.
OCBC forecast full-year growth of 4.7 to 4.8 per cent. Consequently, PBOC was expected to delay the next cut until late this year or into 2027.
Cheung said mainland bank loan growth slowed in the first quarter under current macroeconomic conditions, with lenders more cautious amid pressure on loan quality.
Risks remained high for loans tied to real estate and export trade enterprises, he said, adding that property market issues that first emerged two years ago continued to weigh on asset quality.
EY data showed that impaired loans for small and medium-sized listed banks remained higher than non-performing loans at the end of last year, indicating significant downward pressure on asset quality for these smaller institutions.
In the past quarter, 42 mainland-listed banks recorded a 3.16 per cent year-on-year increase in net profit and a 7.59 per cent growth in operating revenue, a report by EY showed.
By March, their weighted average non-performing loan rate was unchanged at 1.22 per cent, while provision coverage fell 0.84 percentage points to 233.36 per cent from the 2025 year-end figure.


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Steady growth and stabilising China-US ties support banks, with PBOC expected to keep rates steady, according to economists


Steady growth and stabilising China-US ties support banks, with PBOC expected to keep rates steady, according to economists.


Chinese banks see stabilising margins as resilient economy offsets property risks: experts

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Steady growth and stabilising China-US ties support banks, with PBOC expected to keep rates steady, according to economists

Steady growth and stabilising China-US ties support banks, with PBOC expected to keep rates steady, according to economists