Banks fiercely compete in consumer loans and business loans, with ICBC, Postal Savings Bank, and Industrial Bank's credit card business declining by over 10%

Ask AI · Bank battles over consumer loans and business loans, how to break the risk control deadlock?

As of March 27, major joint-stock banks such as Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank, and China Merchants Bank, Ping An Bank, Industrial Bank, and CITIC Bank have disclosed their 2025 annual reports. One noteworthy trend remains the quality of individual loan assets, with most banks experiencing a continuous rise in non-performing loan ratios for personal loans, and most segments showing an upward trend in bad debt ratios. Many institutions attribute this to external factors like macroeconomic changes, but the performance indicators vary significantly among institutions.

Previously, industry insiders warned that under the deep adjustment of the real estate sector combined with efforts to stimulate consumption and expand domestic demand, consumer loans and business loans are key areas for banks to develop their personal lending business, but risk prevention and control deserve more attention. Meanwhile, as credit card business shifts from land grabbing to refined management, the competitive models among institutions will also change.

Focusing on consumer loans and business loans, who is stronger and who is weaker?

In recent years, an objective trend is that, against the backdrop of shrinking household assets and liabilities, the effectiveness of some banks’ “retail transformation” has been significantly impacted, with the proportion of personal business overall declining. By the end of 2025, among large state-owned banks, the “universe bank” ICBC’s share of personal loans has fallen below 30%, and Postal Savings Bank, which traditionally benefits from its service network, also saw its personal loan share drop to around 50%, down 0.5 percentage points from the end of 2020.

By the end of the reporting period, both ICBC and China Construction Bank’s personal loan balances had exceeded 9 trillion yuan. CCB leads ICBC in mortgage, consumer loan, and credit card business scale, while ICBC leads CCB in business loan balance by over 90k yuan.

Among joint-stock banks, by the end of 2025, China Merchants Bank, known as the “retail king,” had a personal loan share of 51.26%, Ping An Bank’s was 50.9%, CITIC Bank’s was 40.37%, and Industrial Bank’s was 32.33%, all showing varying degrees of decline. Notably, the personal loan balances of Industrial Bank and Ping An Bank have also shrunk.

In absolute terms, China Merchants Bank and CITIC Bank currently lead with personal loan balances of 3.72 trillion yuan and 2.37 trillion yuan, respectively. Industrial Bank and Ping An Bank have personal loan balances of 1.92 trillion yuan and 1.73 trillion yuan.

The decline in mortgage demand caused by real estate sector adjustments and early repayments is a significant factor in the contraction of personal loans. Under the background of promoting consumption and expanding domestic demand, consumer loans and business loans have become the main battleground for banks’ personal lending, with last year’s policies offering interest subsidies for consumer and business loans further fueling this trend. This has also been a key highlight in many banks’ financial reports.

Looking specifically at the structure of personal loans, the mainstream trend is an increase in consumer and business loans, with a decline in mortgages and credit card business. Among large state-owned banks, except for Postal Savings Bank, which has relatively steady growth, ICBC, CCB, and Bank of Communications have all achieved double-digit growth in these two segments. CCB’s consumer and business loans both grew by nearly 30%.

Mortgage business continues to shrink. By the end of 2025, the mortgage balances of CCB and ICBC, which lead in this area, have both fallen below 6 trillion yuan, with declines exceeding 3%.

Compared to this, the advantages and strategic differences among joint-stock banks in retail banking are more apparent, with Ping An Bank still in the midst of its retail transformation. In recent years, Ping An Bank has actively reduced the scale of high-risk products like credit cards, consumer loans, and business loans. Its personal loan business has been weak, but last year, it continued to increase the proportion of mortgage loans, with mortgage balances growing by nearly 9%; simultaneously, CITIC Bank’s mortgage balance increased by 5.34%.

The industry-wide slowdown in credit card business is evident, with the credit card balances of these eight banks declining to varying degrees last year. ICBC, Postal Savings Bank, and Industrial Bank all saw credit card declines of over 10%, and China Merchants Bank’s credit card business shrank by 6.79%. Many banks attribute this downturn to macroeconomic factors in their financial reports.

Rising non-performing rates in personal loans and increasing credit card risks

Overall, although the scale of consumer and business loans still lags significantly behind traditional high-quality personal loans like mortgages, recent years have seen rapid growth. However, this rapid expansion is accompanied by increased risks, with the continuous rise in non-performing loan ratios raising market concerns.

By the end of last year, the non-performing rate of personal loans among large state-owned banks approached 1.6%. ICBC and Bank of Communications both saw their personal loan NPL ratios rise to 1.58%, up 0.43 and 0.5 percentage points respectively from the previous year. Among joint-stock banks, Ping An Bank’s efforts to reduce personal loan risks are showing results, with its overall personal loan NPL ratio decreasing by 0.16 percentage points, while China Merchants Bank and Industrial Bank saw slight increases.

Within personal loans, each segment shows a trend of rising bad debts, but concerns are greater for consumer loans, business loans, and credit cards compared to the lower NPL rates of mortgages. Moreover, performance varies significantly among institutions.

By the end of last year, among the four major state-owned banks, ICBC had the highest non-performing rates in mortgages and consumer loans at 1.06% and 2.58%, respectively. Its credit card NPL rate also surged sharply by 1.11 percentage points to a high of 4.61%.

Postal Savings Bank has a relatively high non-performing rate for business loans at 2.44%, but its credit card NPL rate fell slightly by 0.03 percentage points to 1.45%. Meanwhile, CCB, which saw significant growth in both consumer and business loans, managed to reduce the non-performing rates in these segments against the trend.

CCB Vice President Li Jianjiang stated at the March 27 earnings conference that, in response to rising risks in retail, the bank has vigorously optimized its retail credit risk management mechanisms, strengthened risk control in key credit processes, promoted the implementation of centralized retail credit risk management, and by 2025, multiple risk control measures have shown results, narrowing the year-on-year increase in personal loan NPLs. He also noted that risk prevention in retail remains a key focus for the bank.

ICBC Vice President Wang Jingwu said that over the past two years, influenced by economic transformation, real estate adjustments, and temporary supply-demand imbalances, the bank’s personal loan non-performing rate has entered an upward trend in the short term, consistent with the industry trend. However, he emphasized that considering China’s solid economic foundation, resilience, and potential, the long-term positive trend remains unchanged, and personal loan risks are controllable. He mentioned policies like old-for-new and consumer loan interest subsidies, stating that with the accelerated implementation of a package of policies and continued policy dividends, the market foundation for personal credit will gradually improve, and asset quality will return to reasonable levels.

He also stressed that to cope with market changes, ICBC has made internal adjustments in structure and functions, establishing a personal credit business department to achieve centralized and specialized management of personal loans, further improving operational levels. Additionally, the bank is strengthening digital intelligence, enriching product innovation and supply in personal consumption and business sectors, balancing development and safety, and actively resolving various risk issues, ensuring solid disposal of non-performing assets. Under joint efforts of the three lines of defense, the upward trend in personal loan deterioration has slowed.

The situation among joint-stock banks varies more widely. Last year, CITIC Bank and Industrial Bank both improved their mortgage non-performing rates. Currently, among these four joint-stock banks, mortgage NPLs are generally below 0.6%; except for CITIC Bank, the other three have also improved their credit card NPLs, with Industrial Bank’s at 3.34%. In terms of consumer loans, CITIC Bank’s NPL rate is the highest at 2.8%.

(This article is from First Financial)