2025-08-29 15:45Glossary Provides definitions for key terms used throughout the report Important Notice Contains crucial disclaimers and important information regarding the report's content Brief Introduction to the Company's Basic Information Presents a concise overview of the company's fundamental profile and background Financial Summary Offers a high-level overview of the company's key financial performance indicators Overview of Operations Provides a general review of the company's operational performance and business activities Discussion and Analysis Economic, Financial, and Regulatory Environment Global economic growth slowed in H1 2025 with increased trade barriers, while China's economy remained stable with 5.3% GDP growth, supported by proactive fiscal and moderately loose monetary policies, alongside strengthened financial regulation - In H1 2025, global economic growth momentum weakened, trade barriers increased, and major economies showed divergent performance, with uncertainties in inflation trends and monetary policy adjustments; China's economy remained generally stable and improving, with steady growth in production and demand, and new progress in high-quality development30 2025 H1 China's Key Economic Indicators | Indicator | 2025 H1 | YoY Growth | | :--- | :--- | :--- | | Gross Domestic Product (GDP) | - | 5.3% | | Value Added of Industrial Enterprises Above Designated Size | - | 6.4% | | Fixed Asset Investment (Excluding Rural Households) | - | 2.8% | | Total Retail Sales of Consumer Goods | - | 5.0% | | Total Value of Goods Trade Imports and Exports (RMB Denominated) | - | 2.9% | | Consumer Price Index (CPI) | - | -0.1% | - Fiscal policy became more proactive, arranging larger-scale government bonds, issuing ultra-long-term special national bonds to support 'two major' projects, and issuing the first batch of 500 billion yuan special national bonds to supplement core Tier 1 capital for state-owned large commercial banks30 - Monetary policy was moderately loose, with the People's Bank of China lowering the reserve requirement ratio by 0.5 percentage points, reducing the 7-day reverse repurchase operation rate by 0.1 percentage points, leading to a 0.1 percentage point drop in LPR, and establishing structural tools such as re-lending for consumption and elderly care services31 China's Aggregate Financial Indicators as of June 2025 | Indicator (June end) | Balance (trillion yuan) | YoY Growth | | :--- | :--- | :--- | | Broad Money Supply (M2) | 330.29 | 8.3% | | Outstanding Aggregate Financing to the Real Economy | 430.22 | 8.9% | | RMB Loan Balance | 268.56 | 7.1% | | RMB Deposit Balance | 320.17 | 8.3% | | Various Bonds Issued in Bond Market | 44.5 | 16.7% | - Financial regulatory policies promoted high-quality development of the banking sector, establishing a comprehensive statistical system for the 'Five Key Financial Initiatives,' formulating implementation plans for technology finance, green finance, inclusive finance, and pension finance, and strengthening supervision over commercial banks' agency sales and internet lending businesses33 Key Commercial Bank Indicators as of June 2025 | Commercial Bank Indicator (June end) | Amount/Ratio | YoY Growth/Change | | :--- | :--- | :--- | | Total Assets (RMB and Foreign Currency) | 402.89 trillion yuan | 8.9% | | Non-Performing Loan Balance | 3.43 trillion yuan | - | | Non-Performing Loan Ratio | 1.49% | - | | Provision Coverage Ratio | 211.97% | - | | Capital Adequacy Ratio | 15.58% | - | Financial Statement Analysis Income Statement Item Analysis In H1 2025, net profit decreased by 1.5% to 168.803 billion yuan, while operating income grew by 1.6% to 427.092 billion yuan, driven by increased non-interest income despite a slight decline in net interest income 2025 H1 Income Statement Key Item Changes | Indicator (RMB million) | 2025 Jan-Jun | 2024 Jan-Jun | Change Amount | Growth Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Net Profit | 168,803 | 171,296 | (2,493) | (1.5) | | Operating Income | 427,092 | 420,499 | 6,593 | 1.6 | | Net Interest Income | 313,576 | 313,950 | (374) | (0.1) | | Non-Interest Income | 113,516 | 106,549 | 6,967 | 6.5 | | Operating Expenses | 228,186 | 224,083 | 4,103 | 1.8 | | Business and Management Expenses | 102,922 | 99,453 | 3,469 | 3.5 | | Credit Impairment Losses | 104,007 | 101,809 | 2,198 | 2.2 | | Income Tax Expense | 30,205 | 25,888 | 4,317 | 16.7 | 2025 H1 Profitability Indicator Changes | Profitability Indicator (%) | 2025 Jan-Jun | 2024 Jan-Jun | Change (basis points) | | :--- | :--- | :--- | :--- | | Annualized Return on Average Total Assets | 0.67 | 0.75 | -8 | | Annualized Weighted Average Return on Equity | 8.82 | 9.53 | -71 | | Annualized Net Interest Spread | 1.16 | 1.24 | -8 | | Annualized Net Interest Margin | 1.30 | 1.43 | -13 | | Cost-to-Income Ratio | 24.10 | 23.65 | +45 | - Net interest income decreased by 0.1% year-on-year, primarily due to factors such as LPR reduction, adjustment of existing mortgage rates, and changes in deposit maturity structure, leading to a decline of 8 basis points in net interest spread and 13 basis points in net interest margin respectively36 - Interest income from customer loans and advances decreased by 10.4% year-on-year, mainly due to a 60 basis point decline in average yield, partially offset by an 8.3% increase in average balance41 - Interest income from investments increased by 6.5% year-on-year, primarily benefiting from a 21.6% increase in average investment balance, partially offsetting the 39 basis point decline in average yield45 - Interest expense on deposits decreased by 17.1% year-on-year, mainly due to a **39 basis point