This article first appeared on GuruFocus .
Release Date: August 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Postal Savings Bank Of China Co Ltd ( PSTVY ) reported solid H1 2026 results with operating income up 7.24% year-on-year and net profit attributable to shareholders up 4.26%, demonstrating resilience.
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The bank's net interest margin (NIM) of 1.63% remains a leading figure among major state-owned peers, with the decline slowing significantly by 14 basis points, indicating improved liability cost management.
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Strong growth in non-interest income, which rose 12.14% year-on-year, with fee-based income and other non-interest income both achieving double-digit growth, supporting the bank's 'second growth curve' strategy.
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Asset quality remains stable with an overall NPL ratio of 1.00% and a corporate loan NPL ratio of 0.52%, which improved by 2 basis points, while the bank is actively managing retail risk with new loan quality improving.
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The bank has made significant strides in technology and AI, with 370 large model-powered scenarios, a 40% increase in approval efficiency, and a 72% reduction in large model deployment costs, enhancing operational efficiency.
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Postal Savings Bank Of China Co Ltd ( PSTVY ) increased its interim dividend payout ratio to 31%, up 1 percentage point from the previous year, demonstrating a commitment to shareholder returns.
Negative Points
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The bank faces ongoing pressure on its net interest margin (NIM) due to weak credit demand and limited room for further deposit cost reductions, which could impact future profitability.
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Retail asset quality is under pressure, with the overall NPL ratio, overdue loan ratio, and special mention loan ratio all increasing by 5, 8, and 15 basis points respectively from the beginning of the year.
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The personal loan NPL formation ratio remains elevated at 1.67%, and while the pace of deterioration is slowing, the bank continues to face headwinds in its retail loan portfolio.
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The bank's cost-to-income ratio (CIR) declined by 4.17 percentage points year-on-year, but the absolute level of operating costs remains a focus as the bank invests heavily in technology and transformation.
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Despite strong corporate loan growth, the bank's corporate loan book still accounts for less than 50% of total loans, which is lower than the 60% average for major state-owned banks, indicating a structural imbalance.
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The bank acknowledges that it is not insulated from the industry-wide challenges of low interest rates and intense competition, which could continue to pressure revenue growth and asset quality in the future.
Q & A Highlights
Q: What are PSBC's top strategic priorities for the first year of the 15th Five-Year Plan, and where are the key areas needing breakthroughs? A: President Lu Wei outlined the vision to build a world-class large-scale retail bank that is more inclusive, balanced, resilient, smart, and dynamic. The strategy focuses on three pillars: first, leveraging inherent strengths to consolidate core business and sharpen unique features in rural revitalization and inclusive finance; second, addressing shortcomings by fostering new growth pillars like corporate finance and non-interest income to scale up capital-light businesses; and third, embracing technological change by becoming an AI-native digital intelligence ecosystem bank. He identified three critical areas for breakthroughs: accelerating revenue structure transformation to increase non-interest income share, shifting from being a tool user to a tool creator with AI to improve efficiency and business value, and aligning the organization and talent base with the strategic goals through institutional reforms.
Q: Can you share the asset positioning in H1 and the strategy for H2, covering both credit and non-credit assets, and provide an outlook for NIM? A: Vice President Xu Xue Ming detailed that H1 loans rose 7.6% year-on-year, 2.42 percentage points above the industry average, with financial investments increasing by RMB798.9 billion (up 16% YoY). Key features included front-loaded credit disbursement focused on national strategies, corporate loan growth outpacing retail at 16.3% YoY, and ramped-up allocations to government bonds. For H2, the strategy focuses on strengthening retail through integrated marketing and wealth management, enhancing corporate finance capabilities, and improving treasury and asset management offerings. Regarding NIM, it stood at 1.63%, leading comparable peers by 32 basis points, with the decline slowing by 14 basis points. While pressure remains from weak credit demand and limited room for deposit cost reduction, improved deposit discipline and treasury costs are expected to further slow the NIM decline.
Q: How do you assess PSBC's asset quality, particularly in the retail segment, and what is the outlook for the full year? A: CRO Yao Hong acknowledged pressure on retail asset quality due to PSBC's high retail proportion. As of end-June, the NPL ratio was 1%, overdue loan ratio 1.38%, and special mention loan ratio 1.73%, up 5bps, 8bps, and 15bps from year start, respectively, but the growth pace slowed in Q2. Corporate loan asset quality remained excellent with an NPL ratio of 0.52%, down 2bps. For personal loans, the NPL ratio was 1.58%, with the formation ratio declining. The bank has strengthened due diligence, centralized approval, and dynamic risk monitoring, leveraging internal and external data. Looking ahead, the bank will apply stricter eligibility rules for new loans, implement regulatory credit relief programs for temporarily distressed customers, and enhance NPL collection and disposal, expecting risk exposure speed to continue declining while maintaining steady quality.
Q: What are the key growth points for non-interest income, and what is the outlook for the full year? A: President Lu Wei highlighted that non-interest income grew 12.14% YoY in H1, with fee-based income up 12.2% and other non-interest income up 12.09%. Key drivers included wealth management (income up 11.2%, fund agency income doubled), corporate business (fee-based income up 16.82%), and treasury management (bond trading income up 7.78%, bill non-interest income up 36%, and precious metals/derivatives income up 96.9%). For the full year, the bank will focus on five directions: strengthening wealth management, scaling up payment and settlement, enhancing investment banking, strengthening treasury businesses, and scaling up cross-border finance and integrated operations. Lu emphasized this represents a long-term structural transformation, not short-term volume chasing, and expressed confidence in sustained development given the solid customer base and clear strategic direction.
Q: How is corporate banking progressing, and how will PSBC build differentiated competitive strengths as a retail-focused bank? A: President Lu Wei noted corporate banking maintained positive momentum with major metrics achieving steady growth: liabilities and FPA reached a new high of 21.81%, FPA increased 17%, and the NPL ratio fell to 0.5%. The growth is attributed to the industry environment and a sharp focus on corporate banking, with loans to enterprises rising 8.3% YoY, 3.1 percentage points above overall loan growth. As a late starter with a smaller base, PSBC has a late-comer advantage to build a more balanced development paradigm. The bank is improving internal coordination, refining business through chain-based operations, and leveraging AIC licensing advantages to serve the real economy. Future focus includes serving the five priorities, establishing a cross-border financial center, and building a customer-centric, value-driven corporate finance system.
Q: What results have been achieved in AI applications in H1, and what is the impact on PSBC's development? A: CIO Liu Xing Zhuang detailed that PSBC launched the "Post-Wisdom" financial large model with Huawei, reducing deployment cycles from two weeks to one day, cutting cache usage by 72%, and inference costs by up to 87%. Currently, there are 370 large model-powered scenarios with over 10 million data remodel invocations. AI agents have generated personalized marketing proposals for over 54 million high-potential clients, supported over 6,000 cooperative account openings and 2,000 credit approvals totaling nearly RMB310 billion. AI has automated 90% of document data entry and 98% of queries, boosting anti-fraud efficiency by 30% and due diligence efficiency by over 50%. Looking forward, the bank will implement an AI+ finance strategy, building high-value use cases across retail client services, credit applications, and office automation, moving beyond superficial integration to make AI a core driver for the entire industry.
Q: What are the highlights of the wealth management business in H1, and what are the future plans? A: Vice President Xu Xue Ming explained that wealth management is a key way out for retail banks facing challenges. PSBC has 686 million customers with deposits accounting for over 80%, but the target is to shift to a 70/30 non-deposit to deposit ratio. In H1, wealth management customers reached 7.47 million with fast growth, non-deposit AUM increased 14%, equity fund sales more than tripled, and long-maturity wealth management increased 50%. The bank's "Asset Allocation Plus One" program has generated a 9.26% gain ratio with 5.5% annualized income. Future plans focus on three aspects: providing
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
