China Merchants Bank said third-quarter profit attributable to shareholders rose 3.06% from a year earlier to 40.03 billion yuan, according to a Hong Kong stock exchange filing on Oct. 30. China CITIC Bank and Postal Savings Bank of China reported similarly modest gains, leaving them well behind the big four state banks. Bank of Communications, like Postal Savings Bank one of China's six large state-owned commercial banks, was the exception.

The gap matters for investors in Hong Kong, where all four lenders have listed H shares and China Merchants Bank is valued for its retail franchise and high returns. The latest numbers show that the deposit repricing which lifted the big four state banks has done less for lenders that lean on households, whose demand for loans remains soft. China Merchants Bank's retail loans shrank 1.28% this year.

China Merchants Bank Holds Its Margin, but Retail Lending Stays Weak

China Merchants Bank's net operating income rose 6.48% in the quarter to 86.63 billion yuan. Over nine months, profit attributable to shareholders rose 2.38% to 116.48 billion yuan.

Its net interest margin was 1.82% in the July to September period, unchanged from the second quarter. For the first nine months the margin was also 1.82%, down 5 basis points from a year earlier. The bank blamed loan repricing after last year's cut in the loan prime rate, insufficient demand for credit, especially from retail borrowers, and bond yields that have not yet bottomed out. Falling funding costs offset part of the pressure, it said.

Loans grew just 2.69% from the end of 2025 to 7.45 trillion yuan, while deposits rose 4.30%. Fee income held up better than at some peers: net fee and commission income rose 4.29% over nine months, and other non-interest income gained 4.95%, helped by valuation gains on bonds and funds.

Asset quality was steady. The nonperforming loan ratio stayed at 0.94%, and the nonperforming ratio on property development loans fell 0.75 percentage point to 3.89%. The annualized credit cost ratio rose 0.05 point to 0.72%. Annualized return on average equity slipped 0.47 point to 13.49%, still high by mainland standards, and the core tier 1 capital ratio rose 0.23 point to 14.39% under the advanced approach.

CITIC Bank, which reported on Oct. 29, grew quarterly profit attributable to shareholders 4.60% to 17.69 billion yuan. Its nine-month net interest margin fell 3 basis points to 1.60%, and net interest income rose only 1.62%, so most of its growth came from non-interest income, which climbed 9.70%. Its nonperforming loan ratio was unchanged at 1.15% from the end of 2025, and its core tier 1 ratio stood at 9.43%, down 0.05 point.

Bank of Communications Breaks From the Pack

Bank of Communications, the fifth-largest of China's state-owned lenders, behaved more like the big four. Its third-quarter profit attributable to shareholders rose 10.05% to 26.39 billion yuan, and nine-month profit rose 6.10% to 74.26 billion yuan.

Net interest income climbed 9.36% over nine months to 140.69 billion yuan, and the net interest margin widened 4 basis points to 1.24%, the bank said. Fee income fell 1.78%. Reuters reported that BoCom's net trading gains rose 22.7% over nine months, which the bank attributed largely to fair value increases after the July IPO of CXMT Technology, a chip company. Those gains could swing back: Reuters noted that shares of the recent chip listings fell in the fourth quarter.

BoCom's nonperforming loan ratio rose 0.01 point from the end of 2025 to 1.29%, and its provision coverage ratio fell 8.27 points to 200.11%. Its common equity tier 1 ratio was 11.35%.

Fitch Ratings director Elaine Xu told Reuters that the large state banks' access to high-quality borrowers among central and local state-owned enterprises gives them better risk-adjusted returns than most domestic peers.

Postal Savings Bank Shows Early Signs of Credit Strain

Postal Savings Bank, the sixth large state-owned lender and one built on a vast network of household savers, said third-quarter profit attributable to equity holders rose 4.46% to 28.55 billion yuan. Nine-month profit rose 4.56% to 80.06 billion yuan, and operating income grew 6.21%.

Its net interest margin was 1.60%, a level the bank described as outstanding in the industry. It said its cost of customer deposits fell 18 basis points to 0.97%, and non-interest income rose 12.50% over nine months. Loans grew 7.71% this year, faster than at China Merchants Bank.

The credit numbers moved the other way. Postal Savings Bank's nonperforming loan ratio rose 0.04 point from the end of 2025 to 0.99%. Special mention loans, a category that flags borrowers showing early signs of trouble, increased by 43.74 billion yuan to 195.39 billion yuan, lifting their share of loans 0.31 point to 1.88%. The allowance to bad loans fell 23.20 points to 204.74%, and the bank's CET1 ratio dropped 0.32 point to 10.21%, above CITIC Bank's 9.43% but below the ratios at China Merchants Bank and BoCom.

The next test is the fourth quarter. China Merchants Bank has already said the decline in asset yields is narrowing; full-year figures will show whether its 1.82% margin held, and whether Postal Savings Bank's 195.39 billion yuan of watch-list loans turns into bad debt.