Beijing, August 29, 2025 — China’s five largest state-owned banks are bracing for a likely decline in profitability this quarter, as sluggish consumer spending takes an increasing toll on their core operations.
Trends in several key business areas are registering a visible downturn. Personal loans—including those for autos and credit cards—are slowing as households tighten their belts amid stagnant wage growth. Retail borrowing, once a growth engine, is now flagging significantly. Meanwhile, demand for mortgages and property-related financial products has softened in the broader downturn of the real estate sector, further hurting bank earnings.
These institutions dominate the banking sector, with a collective asset base that stretches into the tens of trillions in local currency. Their vast footprint means any hit to their performance could ripple across the entire financial system. Analysts warn that persistent underperformance could compel Beijing to deploy further support measures to stabilize consumer confidence and financial markets.
Key Highlights
- Loan Growth Cooling: Slower demand for personal and retail credit points to weakening consumer confidence.
- Real Estate Drag: Lingering headwinds in housing continue to suppress mortgage-related revenue.
- Systemic Implications: The sheer scale of these banks raises risks for the broader economy if pressure persists.
- Policy Pressure Mounts: Authorities are likely under growing pressure to shore up demand and reassure financial markets.
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