ICBC expects the net interest margin decline to continue to slow down this year

The net interest margin of domestic banks continues to be under pressure, with the Industrial and Commercial Bank of China (01398) seeing its net interest margin narrow by 14 basis points to 1.28% last year, dragging down net income. The bank’s vice president, Yao Mingde, stated at the earnings release conference that he expects the decline in net interest margin to continue to slow this year, with net interest income likely turning positive on a year-on-year basis, marking a turning point.

Yao pointed out that the basic judgment is that the interest margin is highly likely to show an “L-shaped” trend by 2026, with the downward trend in net interest margin (NIM) gradually narrowing; last year’s annual decline was narrowed by 5 basis points. Although it is still declining, the rate of decline has slowed. He believes this trend can be sustained, and if there are no further significant adjustments to the Loan Prime Rate (LPR) and the published deposit rates, net interest income is expected to turn positive year-on-year this year, with the decline in net interest margin further narrowing compared to 2025.

He explained that from this year’s figures, the interest rates of newly issued loans for corporate loans, personal housing loans, and personal business loans have stabilized. In the first two months of this year, the interest rates for newly issued loans decreased by 2 basis points compared to last year, and the actual decline compared to the same period last year has narrowed by 18 basis points, describing it as gradually stabilizing, with the decline significantly narrowing.

However, he added that considering the possibility of further decline in LPR (Loan Prime Rate) this year, future loan yields may continue to decline, but the rate of decline will narrow.