Zhi Tong Cai Jing·2025-10-31 14:14Core Insights - Morgan Stanley's report indicates that while investment income has declined, many mainland banks reported improvements in net interest income and healthy growth in fee income for Q3 2025 [1][2] Group 1: Net Interest Income and Margin - Most state-owned banks experienced higher profit growth in Q3 2025 compared to the first half of the year, supported by stable asset quality [1] - Despite facing net interest margin pressure, many covered joint-stock banks reported a rebound in net interest margin due to lower funding costs and more prudent loan growth and pricing [1][2] - Minsheng Bank and Pudong Development Bank not only achieved a quarter-on-quarter rebound in net interest margin but also improved year-on-year margins, focusing on risk management and customer base improvement rather than just scale growth [1] Group 2: Fee Income Growth - The average fee income growth for covered banks rebounded from 1.4% in Q2 2025 to 11.1% in Q3 2025, driven by a recovery in capital market activities and strong insurance sales [2] - Ningbo Bank led with a 94% year-on-year growth in fee income, while Agricultural Bank maintained a 23.6% year-on-year growth, continuing its strong performance from the previous quarter [2] Group 3: Asset Quality and Credit Costs - Asset quality remained stable in Q3 2025, with the average non-performing loan ratio holding steady at 1.15% for covered banks [3] - Although state-owned banks slightly reduced credit costs to support profit growth, the non-performing loan coverage ratio only marginally decreased to a high level of 263% [3] Group 4: Overall Profitability Trends - Overall, mainland banks continued to show a rebound in profitability in Q3 2025, with state-owned banks accelerating profit recovery due to further declines in credit costs [3] - There was a notable performance divergence between joint-stock banks and local banks [3]