Core Insights - The banking sector in China showed stable performance in the first half of 2025, with a total net profit of 1.2 trillion yuan and a non-performing loan (NPL) balance of 3.4 trillion yuan, indicating a decrease of 24 billion yuan from the previous quarter [1][4] - The non-performing loan ratio stood at 1.49%, down by 0.02 percentage points from the previous quarter, reflecting the overall stability of credit asset quality in commercial banks [1][4] Summary by Categories Profitability and Loan Quality - As of June 2025, the net interest margin (NIM) for commercial banks was 1.42%, a slight decrease of 0.01 percentage points from March 2025, indicating a continued narrowing trend without signs of reversal [1][4] - Private banks, such as WeBank, maintained the highest NIM at over 3%, while the six major state-owned banks had a NIM just 0.01% above the critical 1.3% mark [1][4] Loan Classification and Risk Indicators - Despite a decrease in both the NPL balance and NPL ratio, the amount of special mention loans increased from 4.95 trillion yuan at the end of March to 5 trillion yuan by the end of June, marking an increase of 500 billion yuan [4][6] - The loan loss provisions and the loan provision coverage ratio have improved compared to March 2025, indicating a proactive approach to managing credit risk [4][6] Sector Performance Comparison - The NIM for large commercial banks, city commercial banks, and foreign banks fell below the average level of 1.42%, with large banks recording the lowest NIM at 1.31% [4][6] - The overall loan quality remains stable, with normal loans accounting for 96.30% of total loans, while special mention loans constituted 2.18% [6]