Despite a decline in investment income, more Chinese banks reported improved net interest income growth and healthy fee income growth in their 3Q25 results, Morgan Stanley issued a research report saying.

Most state-owned banks posted higher earnings growth in 3Q25 compared to 1H25, benefiting from stable asset quality. BANK OF NINGBO (002142.SZ)  0.000 (0.000%)   and ABC (01288.HK)  0.000 (0.000%)    Short selling $241.79M; Ratio 24.618%   outperformed their peers.

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While Chinese state-owned banks and CM BANK (03968.HK)  0.000 (0.000%)    Short selling $207.47M; Ratio 23.873%   still faced certain net interest margin pressure, most joint-stock banks covered by Morgan Stanley recorded a rebound in net interest margins in 3Q25, supported by lower funding costs and more prudent loan growth and pricing, which supported net interest income growth, the report noted.

MINSHENG BANK (01988.HK)  0.000 (0.000%)    Short selling $15.97M; Ratio 20.298%   and PU DEV BANK (600000.SH)  0.000 (0.000%)   not only achieved QoQ net interest margin rebounds but also improved net interest margins YoY, as both banks have focused on risk digestion and customer base improvement in recent years rather than solely pursuing scale growth.

Contrary to industry trends, ABC and BANKCOMM (03328.HK)  0.000 (0.000%)    Short selling $21.81M; Ratio 15.942%   reported higher investment income, revenue and PPOP, demonstrating good investment capabilities.

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Overall, Chinese banks continued to show a rebound in earnings in 3Q25. The earnings rebound of state-owned banks accelerated to mid-single digits in 3Q25, benefiting from further declines in credit costs. There was greater differentiation in performance between joint-stock banks and local banks.
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