Chinese lenders' loan growth slows in Q1, EY says

Chinese lenders’ loan growth slowed in the first quarter with a persistent downward pressure on asset quality, especially among some small and medium-sized players, according to accounting firm EY. 

The sector is also becoming more cautious about loan disbursements amid a complex and evolving macroeconomic environment, EY said. 

Among the 25 A-share listed banks that disclosed their net interest margin for the first quarter, more than half saw the figure rise or remain unchanged in the three months, indicating the ongoing pressure from narrowing margins may be stabilizing, EY said. 

Still, there are many lenders that have not yet published their results for the quarter, it noted. 

Chinese banks’ average NIM declined by 13 basis points to 1.40 percent in 2025, marking the sixth consecutive year of contraction, the company said in a report on Thursday. 

In response, they offset pricing with volume, increasing loan disbursements and investment activities, which helped increase net interest income by 0.11 percent last year, halting the downward trend of the previous two years, EY said. 

While the average bad loan ratio of listed banks went down 0.02 percentage points to 1.24 in 2025, the overdue loan ratio rose 0.02 percentage points, it said, adding that among some smaller-sized banks, the ratio of impaired loans remained higher than the bad loan ratio, indicating persistent downward pressure on asset quality.

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