Everbright Bank H1 Net Profit Drops 24%, Write-Off Volume Approaches Full-Year 2024 Level
nashnova research
China Everbright Bank's first-half net profit fell 24.01% to RMB 18.71 billion, far outpacing a 4.32% revenue decline; loan write-offs of RMB 27.36 billion in just six months nearly matched the full-year 2025 figure, as management traded short-term earnings for accelerated bad-debt clearance.
Why did net profit drop nearly a quarter?
First-half revenue came in at RMB 63.07 billion, down 4.32% year-on-year — a moderate decline. Net profit, however, fell 24.01%. The gap traces to one line item.
Credit impairment charges — provisions the bank sets aside for loans it expects to lose — totalled RMB 20.88 billion, up RMB 4.98 billion or 31.30% year-on-year.
This means → the bank deliberately channelled current earnings into loss reserves, sacrificing near-term profit to clean up the balance sheet.
Why do the write-off numbers deserve a closer look?
First-half loan write-offs and disposals reached RMB 27.36 billion. For context, full-year 2025 write-offs were RMB 27.69 billion — six months nearly equalled twelve.
Loan impairment losses alone hit RMB 22.02 billion, up RMB 6.63 billion year-on-year — an unusually aggressive pace.
In plain terms = management is accelerating the disposal of legacy bad debts in one concentrated push; the price is a sharp short-term hit to reported profit.
The interest margin improved — so why is total income still falling?
Net interest income rose 3.17% to RMB 46.87 billion. The net interest margin (NIM) — the spread a bank earns on each unit of assets — edged up to 1.42%, its first increase in two years.
The driver was liability-side cost cuts: average deposit costs fell 37 basis points to 1.55%, with corporate and retail term-deposit rates each dropping over 40 bps — more than offsetting a 32 bps decline in loan yields.
Non-interest income, though, dragged the total down. Investment income plunged 74.82% from RMB 10.38 billion to RMB 2.61 billion; fee and commission income fell 7.34%.
This means → the margin recovery only stabilised the core lending franchise; the non-interest collapse wiped out the good news.
Is asset quality getting better or worse?
Non-performing loans (NPLs) rose to RMB 58.64 billion, up RMB 7.90 billion from year-end; the NPL ratio climbed 0.17 percentage points to 1.44%.
Real-estate NPLs reached RMB 10.70 billion, accounting for 18.25% of total NPLs — property remains the single largest risk pocket.
The credit mix is shifting: corporate loans grew 4.88%, directed toward manufacturing and business services; retail loans (excluding credit cards) shrank 3.28%.
This reflects a deliberate rebalancing — pulling back from higher-risk retail exposure and leaning into policy-supported corporate lending.
Is the provision buffer still adequate?
The provision coverage ratio — how much "ammunition" the bank holds relative to recognised bad loans — fell to 150.02%, down 24.12 percentage points from year-end, and is now close to the regulatory floor.
In plain terms = if bad debts keep surfacing in the second half, the bank faces a tight trade-off: keep sacrificing profit to top up provisions, or risk breaching the regulatory minimum. Room to manoeuvre is shrinking fast.
This is the key variable for tracking Everbright going forward: whether the clearance pace can outrun newly emerging NPLs.
What other signals are worth watching?
Retail AUM reached RMB 3.29 trillion; wealth-management product balances grew 8.05% to RMB 2.10 trillion — the client franchise remains stable with no visible attrition.
The board proposed an interim dividend of RMB 0.081 per share, maintaining the payout despite the steep profit decline — a signal that management remains confident in capital adequacy.
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