CITIC Bank says NIM stabilized in 2Q, while non-interest income and wealth management remain key full-year drivers

Overview

This report is Goldman Sachs's meeting note following China CITIC Bank's participation in the Asia Financials Corporate Day. The core information comes from discussions with the company's IR team and business line managers, covering net interest margin, loans, deposits, non-interest income, asset quality, earnings outlook, capital, and dividends. Overall, the company conveyed a cautious but stable operating outlook for 2026: slower NIM compression, support from lower funding costs, continued rapid growth in fee income, and broadly stable asset quality.

Core views

The core views include: first, 1Q26 saw a significant decline in NIM due to loan repricing, especially mortgage repricing, but it has been stable since 2Q, with full-year narrowing of about 5bp still expected. Second, loan growth remains prudent, with corporate loans prioritized toward strategic corporate sectors and areas related to "new quality productive forces," while retail demand remains weak. Third, declining deposit costs continue to support NIM, but deposit mix is diverging, with risk-averse customers still preferring medium- to long-term time deposits, while higher-risk-appetite customers are shifting toward short-duration liquidity products. Fourth, wealth management, off-balance-sheet business, and some investment income support non-interest income. Fifth, retail loan asset quality remains under pressure, but early delinquency indicators have improved, and the provision coverage ratio remains above 200%.

Analysis framework

The report uses a meeting-note format, breaking down management feedback on business lines into themes including NIM, loans, deposits, non-interest income, asset quality, earnings, capital, and dividends, and combines the company's full-year guidance and forward-looking indicators to form a view on operating trends.

Methodology notes

• Meeting researchAsia Financials Corporate Day management discussion note

  Summarizing management remarks by business theme

  Goldman Sachs hosted a group meeting with China CITIC Bank's IR team and business line managers, and organized management's comments on spreads, credit, non-interest income, asset quality, and capital returns into key investment takeaways.

• Bank operating analysisNIM decomposition

  Asset yields and funding costs jointly determine net interest margin

  The report attributes the 1Q26 NIM decline to loan repricing and lower loan yields, while also noting that maturing time deposits and lower funding costs support NIM.

• Credit risk analysisForward-looking asset quality indicators

  Early delinquency rates, NPL formation rates, and provision coverage ratios are used to assess asset quality trends

  The report focuses on changes in early delinquency rates for mortgages, consumer loans, business loans, and credit cards, and combines these with an NPL formation rate of about 1.1%-1.15% and a provision coverage ratio above 200% to assess risk buffers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 00998.HK

  China CITIC Bank H-share listed security

  Strengths

  Stabilizing NIM, strong wealth management growth, provision coverage ratio above 200%, and rising dividend payout ratio.

  Weaknesses

  Weak retail loan demand, pressure on retail asset quality in 2Q, and loan yields still edging down from low levels.

  Comparison

  It reflects the same bank fundamentals as the A-share 601998.SS, but H-share performance is also influenced by Hong Kong market liquidity, valuation discounts, and exchange-rate factors.

  Risks

  Further NIM compression, worse-than-expected retail NPLs, delayed capital replenishment, and declining investment income.

• 601998.SS

  China CITIC Bank A-share listed security

  Strengths

  Corporate loans are directed toward strategic sectors, declining funding costs support NIM, and the dividend policy emphasizes maintaining a leading position among peers.

  Weaknesses

  The company remains prudent on full-year credit growth, corporate loan pricing is under pressure, and 1H26 profit growth guidance is only about 2%-3%.

  Comparison

  It reflects the same bank fundamentals as the H-share 00998.HK, but A-share pricing is more influenced by the domestic banking sector, interest-rate conditions, and dividend preferences.

  Risks

  Insufficient macro demand, renewed pressure in property and retail loans, and regulatory approvals and capital optimization being slower than expected.

Key data

• Report date2026-06-23The report was published at 23 June 2026 6:33PM HKT.
• 2026 NIM guidanceAbout 5bp narrowingThe company maintains its guidance from the beginning of the year; NIM has been broadly flat since 2Q, though no reversal has yet been seen.
• Full-year corporate loan guidanceRmb300bnThe company maintains prudent credit growth guidance, while retail loans are adjusted dynamically based on demand.
• Wealth management growth1Q26 wealth management products and distribution growth close to 30%Retail AUM ranked second among joint-stock banks over the past five years, and the strong trend has continued into 2Q26.
• AIC registered capitalRmb10bnThe asset investment company was established at the end of last year, focusing on investments in early-stage, small-sized, and hard-tech enterprises.
• Retail early delinquency rateMortgages about 0.5%; consumer loans below 0.1%; business loans about 0.5% in 1QMortgages fell from a peak of around 0.7%, consumer loans fell from a peak of around 0.4%, and business loans had once peaked above 1%.
• NPL formation rateAbout 1.1%-1.15%The overall NPL formation rate has remained within this range in recent years.
• Provision coverage ratioAbove 200%The company expects overall loan loss provisions to remain stable.
• 1H26 revenue and profit outlookRevenue growth of 3%-5%; net profit growth of about 2%-3%The rise in bond yields in 2Q reduced investment income opportunities, resulting in a lower contribution than in 1Q.
• Dividend payout ratio31.75%This has steadily increased from 27%-28% five years ago, and the company aims to remain among the leaders in the joint-stock banking peer group and achieve modest DPS growth.

Impact & implications

For 00998.HK and 601998.SS, the signals from the meeting note are broadly stable: the slower pace of NIM compression and improved funding costs help cushion earnings pressure, while wealth management and fee income provide structural support; however, weak retail loan demand, declining corporate loan pricing, investment income volatility, and the pace of capital replenishment approvals still constrain valuation re-rating potential. Since Goldman Sachs does not cover the stock, this report is more suitable as operating-trend tracking and industry comparison material rather than as a direct basis for ratings or target prices.

Risks

• A low interest-rate environment and loan repricing may put further pressure on NIM.
• If asset quality in retail loans—especially mortgages, business loans, consumer loans, and credit cards—deteriorates again, credit costs may rise.
• Corporate loan demand and pricing are affected by the pace of recovery in the real economy, and credit growth may fall short of guidance.
• Rising bond yields reduce investment income opportunities and may drag on non-interest income.
• The rights issue is still pending regulatory approval, and there is uncertainty around the effectiveness of capital replenishment and the implementation of advanced measurement approaches.

What to watch

• Whether NIM in 2H26 can continue the stable trend seen since 2Q.
• Whether the full-year corporate loan guidance of Rmb300bn can be achieved, and whether retail loans can return to growth.
• Whether fee income growth in wealth management, bond underwriting, letters of credit, and guarantees can continue.
• Monthly changes in early delinquency rates for mortgages, business loans, consumer loans, and credit cards.
• Delivery against 1H26 guidance of 3%-5% revenue growth and 2%-3% net profit growth.
• Rights issue approval, acceptance of the advanced measurement approach application, and the resulting capital-saving effects.
• Whether the dividend payout ratio and DPS continue to edge higher.