China banks eye profit boost as nearly $8 trillion in deposits to be repriced
China's leading state-owned banks are expected to recover from record-low profit margins as nearly $8 trillion in deposits are repriced, easing funding costs. The repricing of high-cost time deposits is expected to boost banks' profits and stabilize their net interest margins.
China's top banks are expected to post a drop in profits or lower income growth for 2025 due to a deepening property sector debt crisis and a slowing economy. However, the repricing of nearly $8 trillion in maturing high-priced time deposits is expected to ease pressure on funding costs and boost profits. Around 54 trillion yuan in time deposits will mature in 2026, with the rolling over of maturing three-year deposits at current rates expected to lower costs by roughly 135 basis points. This is expected to add about 12 basis points to banks' net interest margins. Industrial and Commercial Bank of China and China Construction Bank are expected to post declines in 2025 profit, while Agricultural Bank of China is forecast to report slower net profit growth. For 2026, three of the five lenders are expected to report year-on-year growth in net profit.
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