State-owned banks retail "sword debate": ICBC, Agricultural Bank, and Bank of Communications each unleash their big moves—who will take the crown in retail?

Ask AI · Retail bad debt ratios are generally rising—how can intelligent risk control safeguard bank security?

With interest rates falling and “massive” fixed-term deposits maturing within the year, the retail financial business of banks is entering a decisive moment.

The 2025 annual reports have already been fully released. How strong were the “capabilities” of retail financial business at last year’s state-owned banks? Nandu Bay Finance Society reporters conducted statistics and found that in terms of retail AUM, Industrial and Commercial Bank of China ranks first; in terms of the number of individual customers, Agricultural Bank of China tops the list; and in terms of the proportion of non-deposits in AUM, Bank of Communications is far ahead. As for retail bad debt ratios, all six major state-owned banks saw increases across the board, reflecting that the retail end has become a new area of risk pressure for banks.

In terms of retail performance, only Industrial and Commercial Bank of China and Bank of China achieved “double growth” in revenue and profit before tax. Last year, because the interest margin narrowed, retail business revenue for the six major banks saw net interest income decline across the board. However, amid a rebound in capital markets and the impact of deposit “relocation,” net fee and commission income within retail revenue generally increased.

Retail AUM:

AUM growth for all four major banks exceeded 10%

Bank of Communications has the top non-deposit share

Retail AUM refers to the total size of personal customer assets managed by a bank, including deposits, wealth management products, funds, etc. It reflects the bank’s overall customer value in retail business and its wealth management capability, and it is typically used as a key benchmark for assessing retail business competitiveness.

Based on figures released in financial reports, Industrial and Commercial Bank of China’s retail AUM ranks first at 25.37 trillion yuan. Agricultural Bank of China and China Construction Bank follow closely, both also exceeding 20 trillion yuan. Postal Savings Bank of China and Bank of China rank fourth and fifth, with AUM of 18.30 trillion yuan and 17.58 trillion yuan, respectively. Bank of Communications has the lowest AUM at 5.98 trillion yuan.

In terms of AUM growth, compared with the end of 2024, AUM for the four major banks—Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China—each grew by more than 10%. Postal Savings Bank and Bank of Communications also approached 10%, at 9.64% and 8.91%, respectively.

Retail AUM and the number of individual customers for the six major state-owned banks in 2025. Data source: bank financial reports

In terms of the number of individual customers, Agricultural Bank of China is the undisputed “No. 1.” At the end of last year, its number of individual customers reached 8.96 billion households, and it was also the only state-owned bank to exceed 800 million. By contrast, Bank of Communications had only 205 million individual customers. However, when it comes to the growth rate of individual customers, Bank of Communications ranks first: its number of individual customers grew by 3.09% last year, while the growth rates of the other five major banks were all below 3%.

AUM per customer reflects the wealth level of a bank’s clients. By comparison, Industrial and Commercial Bank of China and Bank of China are the highest, both above 30,000 yuan; Postal Savings Bank and Agricultural Bank of China are relatively lower.

The proportion of non-deposits in AUM reflects the depth of wealth management transformation in retail business—namely, a bank’s ability to convert customers’ funds from low-value deposits into higher value-added investment assets such as wealth management products, funds, and insurance. Nandu Bay Finance Society reporters’ statistics show that Bank of Communications has the highest non-deposit proportion in AUM, at 32.12%, and it is also the only one among the six major banks to exceed 30%. By comparison, Agricultural Bank of China and Postal Savings Bank have lower proportions, both below 20%.

AUM per customer and the proportion of non-deposits in AUM for the six major state-owned banks. Data source: based on financial report statistics

Industry insiders analyze that the relatively low AUM per customer and non-deposit proportion in AUM at Agricultural Bank of China and Postal Savings Bank are related to their positioning of serving the “three rural areas” and focusing deeply on county-level markets. Among their customers, the share of county and rural client groups with conservative risk preferences and mainly savings-based behavior is high. This structural characteristic is precisely reflected in their strategic steadiness.

Retail bad debt ratio:

All six major state-owned banks increased

Largest increase of 0.5 percentage points

If AUM and the number of individual customers reflect the ability to “grow big” in retail business, then retail bad debt ratios determine whether it can be “stable” and “enduring.”

At the end of last year, the personal loan bad debt ratios of the six major banks all rose compared with the end of 2024, with increases ranging from 0.14 percentage points to 0.5 percentage points.

Among them, Industrial and Commercial Bank of China and Bank of Communications had the highest personal loan bad debt ratios, both at 1.58%. Bank of China had the lowest personal loan bad debt ratio at 1.10%.

In terms of the size of increase, Bank of Communications’ personal loan bad debt ratio rose by 0.5 percentage points year over year, while Industrial and Commercial Bank of China increased by 0.43 percentage points.

Personal loan bad debt ratios at year-end 2025 for the six major state-owned banks. Data source: bank financial reports

What are the “main culprits” behind the rise in personal loan bad debt ratios at state-owned banks? The situation differs somewhat from bank to bank.

For credit cards, only Postal Savings Bank’s “credit card overdraft and others” bad debt ratio decreased by 0.03 percentage points; the other five banks saw increases across the board. For personal business loans, only China Construction Bank’s bad debt ratio decreased slightly by 0.01 percentage points; the other five banks all increased. For housing loans, only Bank of China’s bad debt ratio decreased by 0.01 percentage points; the other five banks all increased. For consumer loans, China Construction Bank and Agricultural Bank of China saw bad debt ratios decrease by 0.02 percentage points and 0.09 percentage points respectively; the other four banks increased.

For retail credit risk control, many banks mentioned at their earnings briefings that intelligent risk control has become a common focus for efforts. For example, Lin Li, vice president of Agricultural Bank of China, said the bank has specifically set up a head-office-level digital risk control center in Chongqing to strengthen early identification, early warning, early verification, and early disposal of credit risks in inclusive retail loans. In addition, it is accelerating the construction and rollout of Smart Disposal Platform 2.0, fully aiming to build an “industrial-grade batch processing engine” for inclusive retail bad debts. Wu Jian, vice president of Bank of China, also said that it improves the level of intelligent and data-driven risk control by using data as the driver and advanced technologies as the lever.

Apart from intelligent risk control, another response strategy of Industrial and Commercial Bank of China is to adjust its internal structure and functions. As introduced, the bank established a Personal Credit Business Department, achieving centralized and specialized management of personal lending.

“Inclusive retail loans may have the characteristics of ‘small, scattered, and numerous,’ but we will not let them be ‘disheveled.’ Instead, we want to make them ‘orderly and well presented,’” Lin Li emphasized.

Retail performance:

Only ICBC and Bank of China achieved “double growth”

Net interest income from retail fell across the board

All the efforts in retail business ultimately have to be tested by operating performance.

Against the backdrop of falling interest rates, narrowing interest margins, and fee reductions and profit-sharing, how did the retail performance of state-owned banks fare?

According to financial reports, last year there were noticeable differences in the profit performance of the retail business segments among the six major banks. Only Industrial and Commercial Bank of China and Bank of China achieved “double growth” in revenue and profit before tax year over year.

In terms of revenue, Industrial and Commercial Bank of China’s personal financial business increased by 0.88% year over year, while Bank of China was 0.65%. Agricultural Bank of China, China Construction Bank, and Bank of Communications all saw slight declines.

In terms of profit before tax, Industrial and Commercial Bank of China’s personal financial business profit grew by 43.62% year over year, while Bank of China saw a slight increase of 0.08%. Postal Savings Bank and Bank of Communications saw declines exceeding 40% and 30%, respectively. China Construction Bank and Agricultural Bank of China declined by 10.88% and 7.60%, respectively.

“Transformation in wealth management” and “New Retail 2.0” are mentioned repeatedly—so why do the retail performance data of state-owned banks still lack bright spots?

It is understood that the main sources of revenue for retail banking are net interest income and net fee and commission income. Among them, net interest income faces challenges from the narrowing of net interest margins. Financial reports show that in the personal financial business of all six banks last year, net interest income declined across the board. In contrast, net fee and commission income increased year over year because income from agency wealth management, funds, and other businesses surged.

Taking Agricultural Bank of China as an example, its financial report shows that last year, within its personal financial business revenue, net interest income was 329.29 billion yuan, down 5.56% year over year. Net fee and commission income rose by more than 30% year over year to 53.743 billion yuan. However, because its scale is relatively smaller, it still could not make up for the gap in net interest income.

Retail structure:

Two state-owned banks set up wealth management departments

Experts say the key is customer conversion capability

Looking through financial reports of state-owned banks, it is not difficult to see that wealth management has become a major focus.

Agricultural Bank of China stated that it is putting customer development at the center and firmly and unwaveringly advancing “big wealth management” and digital transformation.

China Construction Bank stated that it steadily promotes upgrades of “New Retail 2.0” in digital intelligence, specialization, and ecological development. It continues to deepen the individual customer tiering, segmentation, and layered operation system, implements the big wealth management strategy more deeply, and focuses on building a “private banking benchmark” brand image.

Some banks also adjusted their organizational structures last year to adapt to the wealth management transformation strategy.

At the beginning of last year, Postal Savings Bank set up a wealth management department within its personal financial business segment. The bank said the purpose of this move is “to systematically reshape the business development model, focus on building core professional capabilities, deeply understand customers’ asset allocation needs in a low-interest-rate environment, help customers achieve the preservation and appreciation of assets, and drive steady growth in the scale of wealth management business while continuously optimizing its structure.”

At the same time, Postal Savings Bank launched the “three-year action to leap in intermediary fee income” project, one of the tasks of which is to enhance wealth management capability—transforming from “selling products” to “acting as an adviser.”

Bank of Communications is no exception. Last year, it advanced reforms to the organizational structure for wealth management. At the head-office level, it established a wealth management department, with the goal to “strengthen the overall coordination of the development strategy, strategies, and business plans for the bank’s wealth management products and service system, and enhance wealth management service capability.”

In March this year, a relevant person in charge of Bank of Communications also told Nandu Bay Finance Society reporters that the bank is implementing retail segment system and mechanism reforms and making related organizational structure adjustments. It is understood that the previously single-purpose private banking specialist institution plans to apply to withdraw its license to accelerate deeper integration with wealth management.

In the view of Tian Lihui, a professor of finance at Nankai University, the core driving force behind large state-owned banks setting up wealth management departments is a “dual squeeze”: first, the global low-interest-rate environment continues, and profit models that rely on traditional deposit-and-loan interest spread face a “ceiling”; second, household wealth continues to grow while the population structure keeps aging, creating huge demand for diversified asset allocation across the full life cycle and for retirement wealth management.

“Establishing dedicated departments aims to integrate resources from the top-level design, enhance professionalism, and upgrade wealth management from a line of business into a core strategic engine driving the bank’s lightweight development,” Tian Lihui said.

He also believes that, compared with joint-stock banks, state-owned banks have clear strengths and weaknesses in wealth management. The strength is that state-owned banks have a large base of customers, deep customer trust, widely distributed physical branch networks, and a huge stock of customer assets (AUM), which forms the “ballast stone” for the business.

The weakness lies in organizational and mindset inertia, which creates challenges when transforming a large system into an agile, customer-centric service model. At the same time, in terms of matching professional capabilities with market-oriented mechanisms, how to build research, asset allocation, and accompanying service capabilities that are no worse than those of top securities firms and fund companies is the real test. Some wealth management subsidiaries of state-owned banks are already facing market pressure in product innovation and customer experience.

“The real deciding factor is whether large state-owned banks can leverage their scale advantage to cultivate refined customer operation capability and a more competitive digital service experience, thereby converting massive customer bases into ‘primary accounts’ for deeply trusted wealth management. This will be key in determining whether they can win in the future,” Tian Lihui emphasized.

Written and reported by: Liu Lanlan, Nandu Bay Finance Society