Direct from Earnings Call | CITIC Bank Chairman Fang Heying: Non-Interest Income Ratio Increased by 9.3 Percentage Points Over Five Years

Everyday Economic News Reporter | Zhang Shoulin Everyday Economic News Editor | Bi Luming

On March 23, at the CITIC Bank 2025 Annual Performance Conference, Chairman Fang Heying disclosed that over the past five years, the bank’s non-interest income share has increased by 9.3 percentage points.

In addition, the bank has spared no effort to build a “strong development-promoting, risk-effective” risk control system, and on the basis of generating revenue, it has enhanced its risk absorption capacity. Over the past five years, the bank has set aside 66 billion yuan annually to absorb bad debts.

Facing future development prospects, Fang Heying proposed that strategies must follow the market, with the company’s core business taking the lead, retail business maintaining steady contribution, financial markets increasing income, and risk control creating value.

Scene of CITIC Bank Performance Conference. Photo by Zhang Shoulin, Everyday Economic News

Retail deposits in demand deposits account for 27%

At the performance conference, Fang Heying mentioned that by 2025, CITIC Bank’s net profit will grow by nearly 3%, ranking among the top in large and medium-sized banks.

He said that a combination of stabilizing income and reducing costs has opened up space for profit growth. This is reflected in three main changes:

First, shifting from stable interest margins to stable revenue. Interest margins are gradually stabilizing, and revenue decline is narrowing. The release of investment trading capabilities and the continuous growth of net fee income have made stable contributions to growth.

Over the past five years, the bank’s non-interest income share has increased by 9.3 percentage points. In 2025, fee income reached 32.77 billion yuan, a 5.6% increase, outperforming peers by 2.2 percentage points, ranking second in both total and growth rate.

Second, moving from declining non-performing loan ratios to reduced credit costs. In 2025, the bank recovered 37.2 billion yuan of non-performing loans, and its annual credit cost rate decreased by 0.07 percentage points. The proportion of asset impairment to revenue decreased by 1.2 percentage points. These are key supports for growth.

Third, from cost control to “double reduction” in operating costs. The bank reduced operating costs by 2.25 billion yuan over the year, with the cost-to-income ratio decreasing by 0.88 percentage points, contributing to growth.

Under pressure from net interest margin, liability business management has received more attention. Fang Heying said that the bank has achieved volume and price balance management in liability business. “We are promoting our liability costs to truly build a buffer against the impact of low interest margins,” he said.

Looking deeper, Fang Heying said that the deposit structure has improved. Since implementing self-discipline mechanisms for deposits, the quality of demand deposits has significantly increased. Retail demand deposits account for 27%, although lower than the company’s deposit demand share, it has increased by 3.2 percentage points in the past two years. Additionally, controlling high-cost liabilities has become more effective, with three-year fixed deposits, structured deposits, and agreement deposits accounting for less than 32%.

He said that the development path of liability business is relatively clear, adhering to a combination of short-term and long-term strategies—short-term based on assessments, medium-term on products, and long-term on systems and capabilities.

In terms of risk control, Fang Heying said that the bank is making every effort to build a “strong development-promoting, risk-effective” risk management system, resulting in positive changes in risk management. On the basis of revenue creation, the bank has improved its risk absorption capacity. Over five years, it has set aside 66 billion yuan annually to absorb bad debts. Additionally, leveraging CITIC’s unique advantage of risk diversification, some key projects are being accelerated for disposal.

“Strategies must follow the market”

Facing the operational environment of 2026, Fang Heying outlined three points of consideration.

First, to be guided by the “Three-Three Strategy” and continuously improve six capabilities. “At the beginning of the year, we proposed to implement the ‘Three-Three Strategy’ over the next five years, which includes three excellence and three leaderships: an excellent wealth management bank, an excellent investment trading bank, an excellent comprehensive financing bank; a leading payment and settlement bank, a leading cross-border financial services bank, and a leading digital bank. Our goal is to become an industry leader,” Fang Heying said.

He believes that these six capabilities represent a comprehensive upgrade and shift in the bank’s traditional deposit, loan, and foreign exchange business. Excellent wealth management expands the bank’s traditional “deposit” function; excellent comprehensive financing and investment trading capabilities extend the “loan” aspect; leading cross-border settlement capabilities expand the “foreign exchange” function; and leading digital capabilities represent a fundamental reshaping of the bank’s DNA. These six capabilities are not isolated points but a coordinated approach to overall bank management.

Second, to coordinate the practice of the “Five Major Articles of Finance” at a high level, integrating the path of building a value-oriented bank with the development of a commercial bank that follows China’s unique path into concrete actions for accelerating transformation.

“This is a big proposition. We need to coordinate these two aspects, accelerate transformation, and deepen the ‘Five Major Articles’ to plan the development of our new-era commercial bank,” he said.

Third, to optimize development strategies based on market conditions and build a visible, accessible, and sustainable new pattern of cross-cycle development.

“Strategies must follow the market. At the beginning of the year, we proposed that the company should take the lead, retail should maintain steady contribution, financial markets should increase income, and risk control should create value,” he explained. The company takes the lead, based on the market and foundation.

Steady contribution from retail means assigning it the responsibility to face challenges head-on, leveraging the rapid expansion of the wealth management market, and building momentum through retail development systems and capabilities.