Chinese commercial banks gain margin relief, but subdued lending dims outlook

Chinese commercial banks experienced a slight increase in their net interest margin (NIM) during the second quarter of 2026, the first such expansion since 2022. The average NIM rose by 0.01 percentage point to 1.41% in the June quarter, up from 1.40% in the previous quarter. This improvement was observed across state-owned lenders, city commercial banks, rural commercial banks, and private banks, although joint-stock banks saw no change and foreign banks experienced a narrowing of their margins. Despite this rare profitability uptick, underlying loan demand in China remained subdued. The data was released by the National Financial Regulatory Administration.