With China’s monetary policy staying steady and slightly accommodative, financing costs continued to decline in 2024, with the five-year Loan Prime Rate (LPR) reduced by a cumulative 60 basis points, aiming to bring loan pricing to historical lows for the real economy. The banking industry, on the other hand, also saw multiple reductions in deposit interest rates to alleviate the pressure from a narrowing net interest margin (NIM).

In response to the continued downward trend in interest rates, one common approach was balance sheet expansion, using increased volume to offset the impact of lower rates on net interest income (NII). However, the compensation effect of this approach has recently become more limited. As shown in Figure.1 below, starting in 2023, the banking industry began to see an inflection point in NII, with a slight narrowing of the decline in 2024, but still staying in a downward trend.

In 2025, China’s monetary policy is clearly turning towards a more accommodative stance, with more cuts to the required reserve ratio and interest rates on the way. This also forces the banking industry to think further about how to continue creating value in a stable and sustainable manner in an environment where NII is pressured.

In response, CCB adopted a comprehensive approach in 2024, focusing on optimising interest-earning assets and interest-bearing liabilities, diversifying non-interest income sources, and controlling operational and risk-related costs. This approach led to a steady performance with progress in key areas:

• CCB has continuously enhanced NII stability and resilience through coordinated asset-liability management
• Seized opportunities, optimised business structure and improved service capabilities
• Centralised reforms have driven both cost optimisation and risk control improvements.

CCB strengthens NII stability and resilience through asset-liability management

Despite the NIM pressures in 2024, CCB maintained solid profitability through prudent asset-liability management. Measures taken to optimise both assets and liability sides played a key role in this. On the one hand, the returns had to continue to operate at low levels to align with policies supporting the real economy by reducing financing costs. On the other hand, the adjustment of liability and cost of funds lagged, with the rate reduction on liabilities being smaller than the decline in asset yields, which further compressed the NIM profitability.

As the volume-based approach was no longer effective since 2023, the industry is in urgent need of reform and differentiated development in this area. In 2024, the four mega banks in China saw NIM contractions of 18-19 basis points, and CCB’s market share in loans grew by 12 basis points year-on-year (YoY), ranking third among the four major banks. Over the past three years (2022-2024), CCB’s loan market share grew by 30 basis points in total, which is the most conservative increase among the four mega banks. This stable and conservative growth strategy was partly due to CCB’s leading NIM level, which provided more room for optimising the volume and price structure.

On the asset side, CCB’s structure of interest-bearing assets has been continuously optimised in recent years, gradually reducing the proportion of low-yield interbank assets while increasing the share of core assets such as loans and bonds with higher yields.

The proportion of high-yield assets, including net loans and advances and financial investments, continued to rise, increasing by 2.7 percentage points YoY in 2024, outpacing the average increase for mega banks. This drives the overall yield of interest-earning assets upwards, solidifying the foundation for interest income. In terms of financial investment, the average balance increased by over 9% YoY, offsetting the impact of declining yields and pushing interest income from this segment up by more than 4%.

Furthermore, within the structure of customer loans, high-interest products such as personal consumption loans and business operation loans grew by over 25%, continuing to increase in proportion. Loans to strategic emerging industries also grew rapidly, and the share of high-quality assets in total loans increased, surpassing the average level of state-owned banks.

Despite a slight decline in loan interest income in 2024, the pressure became weaker than in the industry, and the growth momentum for high-quality assets remained strong, with the overall yield of interest-earning assets maintaining a level of 3.18%. At the conference, Zhang Yi, CCB president pointed out that CCB would “maintain its support for the real economy; continue to strengthen its leading position in the large retail loan market, with reasonable matching of volume and price; and grow corporate loans rapidly, with a continued increase in the share of key sectors.” In response to more proactive fiscal policies and moderately accommodative monetary policies in 2025, President Zhang Yi stated that CCB will follow macroeconomic policy trends, strengthen customer marketing efforts, delve deeper into effective credit demand and maintain reasonable credit growth to sustain stable economic development.

On the liability side, CCB maintained a strong advantage in interest costs. Through continuous optimisation of the structure of interest-bearing liabilities, CCB reduced its total cost of interest-bearing liabilities by 10 basis points compared to the previous year, with the average cost of deposits, the largest interest expense item, decreasing by over 12 basis points. Regarding deposit and funding management, Ji Zhihong, vice president noted: “Regarding differentiated measures to stabilise and increase deposits, CCB's approach can be summarised as 'four enhancements.' First, strengthen customer management; second, enhance fund acceptance; third, enhance product services; and fourth, strengthen structural adjustments.”

In deposit structure, CCB improved transaction fund retention by enhancing its settlement account management, keeping the proportion of demand deposits stable at a high level of 42%, which is consistently above the industry average, effectively reducing the overall interest expense. At the same time, CCB relied on its large user base on mobile banking and its advanced digital platforms, continuing to optimise customer experience and enhance customer loyalty, which supported stable growth in core deposits. The total deposit balance reached RMB 28.71 trillion ($3.93 trillion), an increase of 3.8%.

CCB demonstrated strong proactive and forward-thinking mentality in interest expense management. On one hand, CCB deepened its customer segmentation, focusing on expanding high-net-worth and institutional customers to increase the proportion of low-cost funds. On the other hand, it actively seized market interest rate trends, adjusting interbank liabilities and bond issuance rhythm to optimise liability duration structure. In terms of pricing, CCB established a multi-tiered mechanism, offering differentiated pricing based on comprehensive customer analytics, which maintained market competitiveness while effectively controlling cost pressures. Furthermore, CCB leveraged digital tools to enhance the precision of its liability management, using big data analytics to identify opportunities for low-cost fund retention and optimising deposit product design and marketing strategies, thus further solidifying its advantage in liability costs.

Through structure optimisation on the balance sheet, CCB reinforced the stability and resilience of its net interest income in 2024. On the asset side, it strategically allocated high-yield assets in key areas, effectively hedging the downward pressure on loan yields caused by market interest rate declines. On the liability side, its cost advantages continued to show, with the deposit interest rate falling by 12 basis points YoY to 1.65%, and the proportion of demand deposits remaining stable at a high level compared to the industry. This “high-yield asset + low-cost liability” combined strategy allowed CCB’s NIM to remain at 1.51%, leading the industry even in a challenging environment, highlighting the synergistic effects of asset-liability management.

Looking ahead, Sheng Liurong, chief financial officer stated, “We expect the NIM in 2025 to continue to face downward pressure, but the decline will be smaller than last year. Moving forward, we will further strengthen asset-liability structure optimisation and loan/deposit pricing management, and we are confident that in 2025, we can still maintain a leading NIM in comparable peers.”

CCB optimises business structure and improves service capabilities

In addition to continuous optimisation in interest income, CCB also made considerable progress in diversifying its non-interest income. As fee and commission income faced pressure, CCB successfully diversified its income sources through enhanced investments, foreign exchange (FX) and fair value changes. This strategy not only strengthened income stability but also laid a solid foundation for future transformation.

In 2024, CCB demonstrated robust growth in increasingly diversified non-interest income, with a year-on-year increase of 50.6% in other non-interest income. This outstanding performance was driven by the growth in investment income, FX income and fair value changes. Specifically:

• Investment Income: CCB proactively seized the trading window brought by bond market interest rate fluctuations, strategically reducing holdings of financial bonds held to maturity, generating substantial capital gains. In transactions involving local government special bonds and green financial bonds, CCB accurately judged the policy direction and market trends, successfully locking in gains. In the asset securitisation field, CCB led the issuance of 15 asset-backed securities, totalling RMB 57.249 billion ($7.85 billion), optimising its balance sheet structure and creating considerable fee and investment income.
• FX Income: CCB leveraged its global business advantages and achieved remarkable results in FX. In 2024, the bank’s Renminbi clearing business in the UK hit RMB 126 trillion ($17.27 billion), and cross-border RMB settlement exceeded RMB 5 trillion ($685 billion), both setting new historical records. In the volatile RMB exchange rate environment, CCB effectively captured transaction opportunities using its professional exchange rate risk management and flexible FX position management.
• Fair value changes: The increase in fair value changes was especially notable. As domestic capital markets gradually rebounded, the value of CCB’s trading financial assets significantly increased. Particularly during the interest rate decline cycle, CCB strategically increased its holdings in some credit bonds with appreciation potential, generating substantial valuation gains.

As the anchor of non-interest income, CCB’s fee and commission income also remained stable in 2024. Through the construction of a diversified income structure combining “wealth management + investment banking + international business”, CCB demonstrated a more balanced business structure, with clear innovation-driven characteristics and increasingly strong synergy effects.

As a core pillar of CCB’s strategic transformation, wealth management achieved a full breakthrough in 2024. CCB’s personal customer asset under management (AUM) surpassed RMB 20 trillion ($2.7 trillion), growing by 8.7% YoY. Among this, investment and wealth management reached RMB 4.36 trillion ($597 billion), with net value products accounting for over 85%, and private banking AUM grew by 10.31% to RMB 2.78 trillion ($381 billion). CCB also launched the “CCB Select” brand, establishing a complete "research-investment-advice-products" service system. The coverage of intelligent investment advisors on mobile banking increased to 60%.

CCB’s investment banking business saw both volume and quality improvements in 2024. The bank underwrote RMB 329.849 billion ($45.2 billion) in bonds and executed 216 mergers and acquisitions projects. In the green finance sector, CCB achieved breakthroughs by underwriting 112 green bonds, with a total issuance amount of RMB 1.8639 trillion ($255.6 billion), including multiple market-first innovative products. The asset securitisation business issued RMB 57.249 billion ($7.85 billion), effectively activating existing assets.

In the international business sector, CCB achieved leapfrog development. The volume of cross-border RMB settlements surpassed RMB 5 trillion ($685 billion), and the bank’s Renminbi clearing business in the UK reached RMB 126 trillion ($17.2 billion), maintaining its position as the largest RMB clearing bank outside of Asia. CCB also innovatively conducted the first-ever cross-border RMB settlement for international reinsurance in the aviation sector and provided financing support of RMB 37.355 billion ($5.1 billion) for small and medium-sized foreign trade enterprises through its cross-border quick loan products. Additionally, CCB hosted the global matchmaking event for the third consecutive year, creating a platform for cross-border trade and economic cooperation.

Looking to 2025, CCB will continue to deepen its non-interest income diversification strategy. Liu Fangge, general manager of the financial accounting department noted that CCB will “focus on seizing opportunities in the consumer market, wealth management market and corporate comprehensive service opportunities” to develop non-interest income further actively. By continuously optimising its business structure and enhancing service capabilities, CCB aims to achieve its strategic goal of surpassing 40% of non-interest income as a proportion of total revenue during the 14th Five-Year Plan period, providing continuous momentum for high-quality development.

Liu Fanggen, general manager of the Financial Accounting Department; Li Jianjiang, vice president; and Jin Panshi, former chief information officer

CCB’s centralised reforms drive cost optimisation and improve risk control

While non-interest income continues to grow, CCB has not relaxed its efforts in cost control and risk management. Driven by digital transformation and centralised reforms, CCB has maintained industry-leading cost-to-income (CIR) ratios through precise cost management and efficient resource allocation, providing staunch support for high-quality development.

In 2024, CCB achieved notable success in operation cost control, with the core CIR ratio remaining four percentage points lower than the average for state-owned banks. Through comprehensive cost management, digital transformation and the use of financial technology, CCB effectively reduced operational costs while enhancing business efficiency, ensuring staunch support for high-quality development.

First, through enhanced comprehensive cost management, CCB improved the efficiency of its expenditure. In 2024, CCB’s operating expenses grew by only 1.7% YoY, with a compound annual growth rate of less than 1% over the past three years. By cutting general expenses, CCB allocated more resources to strategic initiatives and customer expansion, with financial technology investment accounting for 3.26% of operating income, continuously supporting digital transformation and innovative services. At the same time, CCB ensured quality and efficiency in expenditure management, keeping the CIR at 29.44%, maintaining its leadership position in the industry.

Second, CCB improved efficiency through vibrant ecosystems, which deepened integration with customers, industry chains and funding chains. This model enabled efficient integration of customer resources and increased product coverage, driving improvements in customer management efficiency and economies of scale. By the end of 2024, CCB had reached 11.68 million corporate customers, 771 million individual customers, and 16.29 million units with RMB settlement accounts, maintaining a leading position in the industry. This model not only enhanced customer stickiness but also reduced per-unit costs through economies of scale.

In digital transformation, CCB significantly improved employee efficiency through the application of financial large models and intelligent tools. Jin Panshi, chief information officer, shared the results of artificial intelligence (AI) training and fine-tuning in the financial sector: “Our financial large model participated in the internal professional technical position examination for all 62 subjects, with an overall average score 20 points higher than the employee exam average, and 22 subjects achieved the highest scores, which demonstrates that the model’s understanding of our business knowledge is quite strong.” In specific business scenarios, tools like AI assistants and code interpreters enabled employees to quickly complete data processing and programming tasks, significantly reducing manual operation time and costs. By the end of 2024, CCB’s financial large model had been applied to over half of the bank’s employees and 46 business areas, with more than 200 application scenarios, further driving operational cost optimisation.

In 2024, CCB also delivered strong results in risk management, particularly in credit risk and risk control in key areas, successfully achieving steady improvement in asset quality and providing a solid foundation for high-quality development.

CCB implemented a series of precise measures and systematic risk control strategies, achieving notable results in credit risk management. The non-performing loan (NPL) ratio decreased by 0.03 percentage points to 1.34%, the proportion of attention loans decreased by 0.55 percentage points to 1.89%, and the provision coverage ratio remained stable at 233.60%. These key improvements highlighted CCB’s solid work and effective strategies in credit risk management.

To cope with an ever-changing risk landscape, CCB utilised advanced early warning models and big data analytics technology to identify potential risks early and ensure they were controlled in their infancy. In the loan approval, issuance and subsequent management processes, CCB strictly adhered to risk assessment and monitoring, ensuring that every loan's risk was within a manageable range. For already exposed risk assets, CCB adopted prudent strategies such as debt restructuring and asset securitisation to effectively reduce the formation of NPLs.

In high-risk areas such as real estate and local government debt, CCB took specific measures to monitor and control these risks. In the real estate sector, CCB actively implemented national real estate regulation policies, ensuring housing delivery and optimising the real estate loan structure by focusing on high-quality projects and companies to minimise exposure to high-risk projects. Additionally, the bank strengthened dynamic monitoring of the real estate market and adjusted risk strategies in a timely manner to reduce non-performing real estate loans.

For local government debt, CCB reduced default risk through debt swaps and structural optimisation, selecting financing projects with stable cash flows from high-quality assets. These measures significantly reduced asset impairment losses.

In conclusion, despite the challenges from interest rate marketisation and the narrowing of NIM, CCB’s performance in 2024 demonstrates resilience and innovation. Through asset-liability coordination to strengthen its NIM advantage (leading the industry with a 1.51% NIM), a diversified non-interest income strategy (with other non-interest income growing by 50.56%), and digital-driven cost and risk management (with a CIR of 29.44%), CCB successfully transition from a "scale-driven" to a "quality-driven" model.

Looking to 2025, with further monetary easing, CCB’s three-pronged strategy— “stable NIM, strong non-interest income, and optimised operations”, may offer a sustainable model for the industry to cope with the low-interest-rate cycle, continuing to write a new chapter in high-quality development.