Chinese banks are likely to face ongoing pressure on their Net Interest Margins (NIMs) throughout 2025, with Morningstar Equity Research forecasting a compression between and basis points. This margin squeeze is consistent with the trend reported by banks in the first half of the year.
However, Morningstar expects NIMs to stabilize during the second half of 2025 as a result of active measures, including deposit rate cuts and “anti-involution policies” designed to limit fierce pricing competition within the industry. Separately, state-owned banks are in a better position regarding non-interest revenue, with fee income growth projected to remain stable through 2029, bolstered by economic recovery and increased consumer card spending.
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