CITIC Bank Hu Gang: In Response to Bond Market's "Low Rates and High Volatility," Establish Dual-Drive Strategy of Ticket Yield and Trading Spreads

How did Hu Gang leverage his bond business experience to lead CITIC Bank’s countercyclical growth?

On March 23, during CITIC Bank’s 2025 performance release, Vice President Hu Gang provided an in-depth analysis of the financial market performance and future trends. He pointed out that in 2025, the bond market experienced gradual weakening amid bilateral fluctuations, differing from the single-sided strength in 2024. While the financial industry generally saw negative growth, CITIC Bank’s financial market business maintained steady growth, with year-over-year performance significantly improving compared to the third quarter.

Hu Gang attributed this achievement to three core highlights: First, outstanding operational performance, with bond business outperforming the market. “Bond investment interest income decreased by 15%, lower than the industry by 9 percentage points; OCI account spread income was 2.12 times higher than comparable peers, both indicators ranking in the top two among peers.” Additionally, the bank’s government bond underwriting reached 500 billion yuan, ranking first among domestic commercial banks; foreign exchange market-making transactions grew by 21% year-over-year, leading multiple market indicators. Second, strategic transformation progressed steadily, aiming to build an excellent investment and trading bank, with the headquarters establishing new financial industry centers and foreign currency asset management centers. Third, structural adjustments continued to optimize, with flexible OCI account operations improving bond structures and laying a foundation for future development.

Looking ahead to 2026, Hu Gang assessed that the domestic and international environment remains complex. “Domestically, loose monetary policy and low interest rates are certain; the tug-of-war between stocks and bonds and the macroeconomic recovery outlook will pose challenges for bond market investments. Internationally, geopolitical conflicts intensify, and policy cycles in major global economies diverge, creating uncertainties in cross-border capital flows and foreign exchange fluctuations.” He predicts that the bond market in 2026 will likely present a neutral pattern characterized by low interest rates and high volatility.

In response to these challenges, Hu Gang revealed that CITIC Bank has formulated three core investment strategies: First, hold and earn coupons, increase investments in credit and local government bonds, and build capabilities in credit, market-making, and branding; second, trade for spreads, maintain significant exposure and proportion in government bonds and policy financial bonds, and generate spread income through tactical operations; third, optimize asset allocation, improve the macro asset allocation system, and increase overseas investments under controllable risk conditions.

Hu Gang stated that in January and February 2026, revenue from financial market business increased by over 100%, with non-U.S. investments accounting for more than 39%. Regarding the full-year outlook, he cautiously expects revenue growth of over 10%, expressing confidence in business development.