China Everbright Bank’s First-Half Net Profit Plunges 24%; Write-Offs in Six Months Approach Full-Year 2025 Level — BigGo Finance

China Everbright Bank (06818.HK) released its 2026 interim report on the evening of August 28, showing first-half net profit attributable to shareholders of the parent company of RMB 18.711 billion, a sharp decline of 24.01% compared with the same period last year. Against a backdrop where commercial banks across China are broadly under operating pressure, the most striking element of this interim report is not the modest contraction in revenue, but rather the concentrated recognition of credit impairment losses and the fact that write-offs in just six months have nearly matched the full-year level from last year.

In the first half, China Everbright Bank achieved operating revenue of RMB 63.068 billion, down 4.32% year-over-year. The decline in net profit attributable to shareholders far exceeded the revenue decline, with the two trajectories diverging significantly—the core reason being the intensified pace of risk clearance on the asset side.

During the reporting period, the bank recognized credit impairment losses of RMB 20.879 billion, an increase of RMB 4.977 billion from the same period last year, representing a 31.30% rise. Of this total, impairment losses on loans and advances amounted to RMB 22.024 billion, up RMB 6.625 billion year-over-year, constituting the primary component of impairments.

Even more noteworthy is the write-off data. In the first half, China Everbright Bank wrote off and disposed of loans and advances totaling RMB 27.36 billion, already approaching the full-year 2025 figure of RMB 27.685 billion. Management deployed nearly an entire year’s worth of write-off capacity within just six months, demonstrating a clear intent to accelerate the clearance of existing risk—but this also directly compressed operating profit margins.

Net Interest Margin Rebounds as Liability-Side Cost Reduction Takes Effect

From a revenue structure perspective, net interest income and non-interest income moved in markedly different directions.

First-half net interest income was RMB 46.871 billion, growing 3.17% against the trend. Net interest margin (NIM) stood at 1.42%, up 2 basis points year-over-year, marking the first rebound in nearly two years. Net interest spread was 1.36%, up 5 basis points year-over-year.

The driver of margin improvement came from the liability side. Affected by LPR cuts and concessions to the real economy, the bank’s average loan yield declined 32 basis points to 3.37%. However, the average cost rate on customer deposits fell sharply by 37 basis points to 1.55%, with corporate time deposits and retail time deposits both seeing cost rate declines exceeding 40 basis points. The reduction in liability costs more than offset the contraction in asset-side yields, driving improvements in both net interest spread and NIM.

Non-interest business, however, faced significant pressure. Dragged down by fee rate reductions in bank card and agency businesses, net fee and commission income declined 7.34% to RMB 9.676 billion. The impact of capital market volatility was even more severe, with investment income plummeting from RMB 10.377 billion in the same period last year to RMB 2.613 billion, a year-over-year decline of 74.82%, making it the primary cause of the contraction in non-interest income. Other income, including investment income, fell to RMB 6.521 billion, down 35.07% year-over-year.

Corporate Loans Expand, Retail Contracts; Asset Quality Under Pressure

The credit structure exhibited a pattern of “corporate expansion, retail contraction.” Corporate loan balances grew 4.88% from the end of the previous year to RMB 2.55 trillion, primarily directed toward manufacturing, leasing, and business services. Retail loan balances (excluding credit cards) declined to RMB 1.06 trillion, down 3.28% from the end of the previous year.

Changes in asset quality indicators are equally worth monitoring. As of the end of June, China Everbright Bank’s non-performing loan balance increased by RMB 7.897 billion from the end of the previous year to RMB 58.639 billion, with the non-performing loan ratio rising to 1.44%, up 0.17 percentage points. Among these, non-performing loans in the real estate sector increased to RMB 10.701 billion, accounting for 18.25% of total non-performing loans.

Due to the dual impact of risk exposure and impairment recognition, the bank’s provision coverage ratio fell 24.12 percentage points from the end of the previous year to 150.02%, approaching the regulatory red line with a notably narrowed safety margin.

Note: Data sourced from China Everbright Bank’s 2026 interim report.

The narrowing of the provision buffer means that if credit risk continues to be released in the second half, the bank will face a more severe trade-off between maintaining provision compliance and smoothing its income statement.

Capital Adequacy Remains Compliant; Interim Dividend Plan Announced

On the capital front, as of the end of the reporting period, the group’s core Tier 1 capital adequacy ratio stood at 9.67%, Tier 1 capital adequacy ratio at 11.69%, and total capital adequacy ratio at 13.35%, all meeting regulatory requirements. The group’s total assets were RMB 7.251234 trillion, up 1.20% from the end of the previous year; total loan and advance principal was RMB 4.068283 trillion, up 2.21%; and deposit balances were RMB 4.192705 trillion, up 2.20%.

The board of directors recommended an interim cash dividend of RMB 0.81 per 10 shares, totaling RMB 4.786 billion.

Overall, China Everbright Bank achieved improvement in underlying interest income through liability management in the first half, while its wealth management customer base remained broadly stable. However, the asset quality clearance process is still accelerating, and the shrinking room for provision adjustments will be a key dimension for the market to monitor at this joint-stock bank in the second half.