Core Insights - The banking sector in China is showing signs of profit recovery, with a slight decrease in net profit year-on-year, indicating a narrowing decline compared to the previous quarter [1][2]. Group 1: Profitability - In the first half of 2025, commercial banks achieved a cumulative net profit of 1.2 trillion yuan, down 1.2% year-on-year, but the decline has narrowed by 1.1 percentage points compared to the first quarter [2]. - The net profit growth rate for the banking industry turned positive in the second quarter, reaching 0.1% year-on-year [3]. - Different types of banks showed varied performance, with state-owned banks performing best, while rural commercial banks lagged significantly [3]. Group 2: Net Interest Margin - The net interest margin for commercial banks in the first half of the year was 1.42%, with a slight decrease of 1 basis point from the previous quarter, indicating a significant slowdown in the rate of decline [5]. - The interest margins for different bank types were reported as follows: state-owned banks at 1.31%, joint-stock banks at 1.55%, city commercial banks at 1.37%, and rural commercial banks at 1.58% [5]. - The decline in net interest margin is expected to stabilize around 1.4% for the remainder of the year due to supportive monetary policies [6]. Group 3: Asset Quality - As of the end of the second quarter, the non-performing loan (NPL) balance was 3.4 trillion yuan, a decrease of 24 billion yuan from the previous quarter, with the NPL ratio dropping to 1.49% [7]. - The NPL ratios for different bank types were as follows: state-owned banks at 1.21%, joint-stock banks at 1.22%, city commercial banks at 1.76%, and rural commercial banks at 2.77%, all showing a decline from the previous quarter [7]. - The provision coverage ratio for commercial banks increased to 211.97%, reflecting improved risk resilience [7][8].