"Scraping the Bone" for Two Years, Ping An Bank Vows to Return to Growth

Over 210,000 viewers watched the Ping An Bank 2025 earnings release, revealing complex emotions of caution and hope.

After two and a half years of strategic transformation, President Ji Guangheng set the tone for the bank’s phased achievements in his opening speech, openly stating, “We see the light at the end of the tunnel.”

At the new starting point of the “14th Five-Year Plan,” this financial institution, known for its strong explosive growth in the past, is striving to prove its cyclical resilience to the capital markets.

Management clearly defines 2026 as a critical year for implementing reforms and transformation, and has set the business goal of “returning to growth.”

However, the financial report’s underlying figures still reflect the chill of deep transformation.

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

This marks the second consecutive year after 2024 that the bank has reported declines in both revenue and net profit.

As management publicly announced that the reduction of high-risk assets is nearing completion, market attention on this financial statement has intensified:

When the once-excess net interest margin is gradually eroded by macro cycles, and the old high-yield model begins to disintegrate, how will this joint-stock commercial bank fill the huge revenue gap? What paths will it take to fulfill its strategic promise of “returning to growth”?

** Successfully Stopping the Bleeding **

At the earnings conference, management admitted that in recent years, Ping An Bank has actively absorbed high-risk assets and resolutely exited high-risk customer groups. This painful “surgical removal” of assets has now largely been completed.

A deep look through the balance sheet reveals that a profound asset restructuring is quietly underway within the bank.

As the main battlefield of this “radical detox,” the retail business—once a major source of high returns but frequently under pressure during economic cycles—has seen a decisive reduction in credit card assets.

By the end of 2025, the bank’s credit card receivables fell to 405.442 billion yuan, a 6.8% decrease from the previous year’s end; meanwhile, to stabilize the retail asset base, low-risk housing mortgage loans expanded against the trend, reaching 355.148 billion yuan, up 8.9% from the previous year; new auto loans for personal vehicles reached 72.626 billion yuan, a sharp 13.9% increase year-on-year.

This proactive risk-averse strategy has yielded clear improvements in asset quality.

By the end of 2025, Ping An Bank’s personal loan non-performing rate dropped significantly from 1.39% to 1.23%. Among these, the previously high-risk credit card business saw its bad debt ratio sharply reduced by 0.53 percentage points to 2.24% since 2024’s peak; the core mortgage segment further improved to 0.25%.

The improvement in key risk control indicators confirms the management’s effective “clearing of mines” on the asset side. This positive trend in asset quality has also subtly influenced the profit statement, creating ripples of recovery.

In 2025, the net profit from retail financial services reached 2.683 billion yuan, a remarkable rebound from the mere 280 million yuan in 2024.

A closer look reveals that this profit recovery is not primarily driven by a substantial revival in front-end revenue-generating capacity.

In 2025, retail operating income remained under pressure, declining 13.5% year-on-year to 61.626 billion yuan, with the contribution to total bank revenue falling by 1.7 percentage points to 46.9%.

This “revenue reduction but profit increase” phenomenon hinges on the bank’s provisioning adjustment mechanism within its financial system.

From a bank-wide perspective, accelerated cleanup of high-risk assets led to a 0.17 percentage point decrease in the overall non-performing loan generation rate. The stabilization of asset quality has objectively alleviated the burden of large provisioning.

Specifically, in the retail sector, the bank’s impairment losses on credit and other assets in 2025 amounted to 37.576 billion yuan, a significant 22.9% reduction from 48.729 billion yuan in 2024. This means the retail segment made over 11.1 billion yuan less in impairment provisions in 2025. This substantial reduction in provisioning funds directly “repaid” and supported the recovery of net profit on the books.

However, the impairment consumption in the retail sector remains high.

In 2025, the retail segment’s consumption of impairment resources accounted for 92.6% of the bank’s total, slightly down from 98.6% last year, but still consuming the majority of the bank’s provisioning capacity.

This indicates that retail bad debts are still heavily consuming resources;

But from a positive perspective, once the underlying retail asset quality is thoroughly solidified and impairment provisions further reduced, the bank’s provisioning buffer for profit recovery remains substantial.

Loss of Momentum

If provisioning acts as a profit cushion, then net interest margin (NIM) is the core moat of bank profitability—and this is the most severe challenge Ping An Bank currently faces.

Over the years, the bank’s NIM has fallen from a high of 2.79% in February 2021 to 1.78% in 2025. This 101 basis point decline is driven not only by macro environment and LPR re-pricing but also by a fundamental strategic shift within the bank.

Looking back, Ping An Bank was once ranked alongside China Merchants Bank as a “dual NIM champion” among joint-stock banks. Unlike CMB, which relied on low-cost liabilities as its moat, Ping An Bank’s retail transformation in 2016 led it down a path of high-priced asset-based margin expansion.

However, this high-yield, high-risk model inevitably backfired during cyclical downturns. As credit card and consumer loan non-performing rates rose to 2.77% and 1.23% respectively in 2023, the bank’s underlying asset risks accelerated.

The sharp decline in NIM now reflects a painful correction of past excesses.

To stay within risk boundaries, Ping An Bank has begun shifting credit resources toward safer, lower-yield assets, leading to a continuous decline in the average yield of new loans to 3.87% in 2025—a 67 basis point drop from the previous year.

The rapid fall in asset yields must be offset by a reduction in funding costs.

Despite efforts to optimize structure—cutting personal deposit interest rates by 34 basis points to 1.82% in 2025—the bank’s core deposit base faces growth constraints, with total personal deposits remaining at 1.28 trillion yuan at year-end, roughly unchanged from last year.

This indicates that after abandoning the strategy of price wars to attract deposits, retail funds have entered a plateau phase.

On one side, asset yields are plunging; on the other, funding costs remain relatively rigid;

The resulting intense friction not only erodes the previous interest margin advantage but also underpins the bank’s double-digit revenue decline.

Alongside pressure on traditional net interest income, the bank’s fee and commission income has also experienced a phase of decline.

Amid industry-wide narrowing of net interest margins, “wealth management” was once expected to boost non-interest income and stabilize cyclicality. However, the bank’s fee and commission net income has fallen from a high of 33.062 billion yuan in 2021 to 23.894 billion yuan in 2025.

Although leveraging Ping An Group’s comprehensive financial ecosystem, the bank’s agency income from personal insurance grew significantly by 53.3% in 2025 to 1.292 billion yuan. Yet, this partial increase is insufficient to fully offset the overall decline in agency funds, wealth management, and other segments.

This reflects the difficulty of transforming wealth management and indicates that its distribution capacity, research foundation, and customer trust still require long-term cultivation through market cycles.

Faced with declining traditional profit engines, management revealed new business initiatives at the earnings conference.

After decisively retreating from high-risk, high-yield old products, Ping An Bank is attempting to establish new asset bases—products like Orange e-loan and Orange business loan, with a scale exceeding 30 billion yuan and good asset quality.

This signals the bank’s effort to explore a more stable middle ground between risk and return.

However, in terms of scale, the 30 billion yuan of new products still accounts for a tiny fraction of the 1.72 trillion yuan in personal loans.

Historically, the bank’s profit system heavily relied on the large scale of high-yield credit assets. The current mid-yield products need to quickly fill the revenue gap left by the shrinking high-interest assets, but face significant scale-up challenges.

Growth Outlook

In the face of the massive shift between old and new drivers, “returning to growth” remains a frequently repeated phrase at the earnings conference. President Ji Guangheng confidently told the market that “the hardest times are behind us.”

In the industry’s overall revenue pressure, the bank’s management is not just relying on enthusiasm but on a well-planned financial and business strategy.

The primary basis for management’s optimism for 2026 is the cleanup of “dragging” assets.

As the reduction of high-risk retail assets nears completion, the aggressive “shrinking” of the balance sheet will halt in 2026; combined with continued decreases in credit impairment provisions, the two-year decline in performance has created a very low financial baseline.

As long as the growth pace remains steady, slight marginal improvements can translate into positive growth on the financial statements.

Second, the expectation of net interest margin recovery driven by lower funding costs.

Although deposit growth was modest, increasing by only 1.4% from last year’s end, the bank’s average deposit interest rate in 2025 dropped sharply by 42 basis points, ranking among the top in joint-stock banks, supporting margin recovery and revenue stabilization.

More fundamentally, the strategic support comes from strong corporate banking expansion and “public-private synergy.”

In the pain of transitioning between old and new drivers, the bank’s strategy is to leverage its over 20 years of supply chain finance expertise, deepening industry and customer engagement through public-private cooperation.

The financial report confirms this strategy’s acceleration: in 2025, corporate general loans grew by 9.2%, and the number of corporate clients increased by 13.2% against the trend.

With a total supply chain financing volume of 1.96 trillion yuan, Ping An Bank is turning this solid foundation into a “door-opener” for acquiring new clients. Its core plan is to precisely identify corporate customers through real transaction scenarios and then use payroll services, wealth management, and other services to feed back to retail clients, attempting to re-establish a positive “volume, price, risk” cycle.

However, beneath this optimistic growth outlook, there are still many variables lurking deep within the bank’s balance sheet that require cautious attention.

First, the migration pressure of underlying credit assets.

Although the bank’s non-performing rate remained at a safe 1.05% at year-end, early warning signals are evident. In 2025, the migration rate of watchlist loans was as high as 48.25%, with nearly half of these loans downgraded, indicating that during the macroeconomic transition, the repayment capacity of enterprises and individuals remains fragile.

Second, the corporate banking core facing cyclical tests.

During the pain of retail transformation, corporate business supported the overall performance. But affected by industry cycles, the non-performing rate of corporate loans rose to 0.87% in 2025, with corporate real estate non-performing loans soaring 0.43 percentage points to 2.22%. The strategic plan of corporate-public synergy must be based on stable asset quality, which places high demands on risk control.

Third, profit adjustment space in the future is limited.

After two years of revenue pressure, the bank used “less provisioning” to smooth profits, but at the cost of a sharp decline in the provisioning coverage ratio to 220.88%, nearly 30 percentage points lower than last year.

Objectively, this aligns with the logic of risk clearing, but the safety cushion has thinned significantly.

If credit demand in 2026 does not recover as expected, and revenue does not improve substantially, the bank’s room for profit smoothing via provisioning will be limited, and the profit statement will face real challenges.

In summary, based on financial logic, supported by a very low base effect, sharply reduced interest costs, and a lean balance sheet, it is highly probable that Ping An Bank will see “moderate numerical recovery” in 2026. The management’s optimism is backed by solid financial fundamentals.

But this is only the first step out of intensive care.

For Ping An Bank, the real long-term test lies ahead: when the era of ultra-high interest margins is truly over, the old engines are dismantled, and new drivers are still in their infancy, this formerly retail star that once led the pack must prove itself in a more competitive, smoother industry environment—able not only to “detoxify” but also to possess a resilient, refined blood-making gene.