---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 279139
conversation_id: 17dec844-368c-43e5-a84a-90af1ef59081
citations: 22
created: 2026-05-31 20:39:02Z
---

# Provide a one‑year narrative of ICBC, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# ICBC (1398 HK / 601398 CH) — One-Year Narrative (June 2025 → May 2026)

## Setting the stage: an "outperform" rerated to "no upside" (June 2025)

The 12-month window opens with **ICBC trading at HK$5.90** for the H-share and **Rmb7.09** for the A-share, but the sell-side was already calling the move done. In a 6 June 2025 transfer-of-coverage note, **CLSA reiterated O-PF (Outperform)** on ICBC but with a **target price of HK$5.20 (vs HK$5.90 spot — implying ~12% downside)** and **Rmb6.70 on the A-share (vs Rmb7.09)** [1]. The note moved the entire China banks complex (ICBC, CCB, ABC, BoC, CMB, Bocom, PSBC, etc.) onto a new analyst (Ding Luo) following a CLSA team restructuring [2]. The setup was therefore a classic **defensive-yield, low-conviction** view: the dividend was bankable, but valuation was perceived as full given relentless NIM compression and a real-estate workout still in progress.

## 1H 2025 results (released August 2025): NIM compressed but cost discipline showed

ICBC's interim results crystallised the bear case but also revealed the offset. **1H25 NIM was 1.30%, down 12 bp YoY and 6 bp HoH** [4] — the decline rate was *narrowing*, but the franchise was still re-pricing through the May 2025 LPR cut. Headline KPIs: **net profit RMB168.8 bn**, **ROA 0.67%**, **ROE 8.82%**, **NPL ratio 1.33%**, **provision coverage 217.71%**, **CAR 19.54%** [3]. Management took three deliberate actions: (i) extended RMB-asset duration while keeping foreign-currency assets short to capture mismatch; (ii) **drove RMB general-deposit cost down 26 bp YoY**; and (iii) actively cut posted deposit rates to absorb the LPR shock [4].

The investor-relations highlight was a **first-ever interim dividend** of **RMB1.414 per ten shares (~RMB50.4 bn)** announced alongside the 2024 final payment of **RMB58.7 bn** that was paid in July 2025 [5]. ICBC framed this as a structural shift to a **twice-a-year payout rhythm** at a ~30% ratio, a direct response to investor calls for higher distribution cadence — a recurring theme on prior earnings calls. Management also reminded investors that the **A-share had returned 44.8% and the H-share 36.4% in 2024**, with both still outperforming the sector by **9.7%/19.4%** in 1H25 [5]. The interim print, the dividend-cadence change, and the slowing pace of NIM erosion together began to soften the negative analyst skew.

## September–October 2025: capital optimisation and steady 3Q delivery

On **23 September 2025**, ICBC executed a capital-stack optimisation, **redeeming all US$2.9 bn of offshore preference shares** issued in 2020, after NFRA non-objection [6]. With higher-cost legacy USD-denominated capital retired and the AT1 layer ready to be refilled domestically, capital efficiency improved.

The **3Q 2025 print (released 30 October 2025)** delivered the inflection markets needed: **Q3 net profit attributable to shareholders of CNY 101.81 bn, +3% YoY vs CNY 98.56 bn** [17] — the first quarter of clear bottom-line acceleration after several quarters of flattish growth. By the 3Q call, management was openly acknowledging that **industry asset quality on inclusive loans was seeing a "modest rebound"** (i.e., a softening in SME credit) but that ICBC's NPL on this book was still better than the industry [8]. Recovery action and disposal-channel widening (asset securitisation, cash recovery) were highlighted as offsets.

## November 2025: peak-skepticism downgrade against rising tape

On **5 November 2025, DBS Group downgraded ICBC to Hold from Buy** at a reference A-share price of CNY 8.13 [18]. This was a textbook valuation-driven downgrade — the A-share had rallied hard from the June Rmb7.09 starting point. Counter-intuitively, the H-share continued to grind higher into year-end and started hitting **52-week highs** during the November 11–20 window (visible in Hong Kong / China 52-week high lists). The market had decided the easing pace of NIM erosion + dividend cadence + capital discipline were worth more than incremental downgrades.

## FY 2025 results (released 27–30 March 2026): the durability case strengthens

The full-year print, reported alongside the 2025 sustainability report on **27 March 2026 (stock at HK$6.62)** and broker takeaways published 30 March 2026 at **HK$6.54**, delivered the data points the bulls needed [19]:

| FY 2025 Metric | Value | YoY change |
|---|---|---|
| Net profit (RMB mn) | **370,766** | **+1.0%** [11] |
| Operating income (RMB mn) | 801,395 | +1.9% [11] |
| Net interest income (RMB mn) | 635,126 | (0.4)% [11] |
| Non-interest income (RMB mn) | 166,269 | **+11.8%** [11] |
| **NIM** | **1.28%** | **(14) bp** [9][10] |
| Net interest spread | 1.15% | (8) bp [10] |
| ROE (weighted avg) | 9.45% | (43) bp [9] |
| ROA (avg) | 0.72% | (6) bp [9] |
| Cost-to-income | 29.48% | +5 bp [9] |
| **NPL ratio** | **1.31%** | (3) bp [9] |
| Total loans (RMB tn) | 30.5 | **+7.5%** [12] |
| **Avg cost of deposits** | **1.36%** | **(36) bp** [12] |

Two narratives crystallised in the FY numbers:
- **Margin defence was real**. The 36 bp deposit-cost reduction "effectively offset[s] downward pressure on loan yields and significantly narrowed the decline in NIM" [12]. Sector-wide commentary on 30 March 2026 — **"Chinese banks see NIM pressures easing, but outlook remains challenging"** — independently confirmed this read [20].
- **The income mix was tilting to fees and trading**. With non-interest income +11.8% and net fee & commission income at 13.87% of revenue, ICBC was offsetting NII weakness with wealth management, global operations, and AIC-related diversification [11].

Asset quality also improved at the margin: NPL ratio ticked **down 3 bp to 1.31%**, with loans to manufacturing, sci-tech innovation, and inclusive finance growing 19.4%, 19.9%, and 22.8% respectively [12].

## Q1 2026 results (released 29 April 2026): acceleration confirmed

The first quarter of fiscal-2026 was the cleanest beat of the cycle:

| Q1 2026 Metric | Value | YoY change |
|---|---|---|
| Operating income (RMB mn) | **221,980** | **+8.45%** [13] |
| Net interest income (RMB mn) | 168,531 | +7.49% [13] |
| Net fee & commission income (RMB mn) | 40,916 | +5.24% [13] |
| Net profit attributable (RMB mn) | **86,941** | **+3.31%** [14][22] |
| Annualised NIM | **1.29%** | +1 bp vs FY25 [13] |
| Total assets (RMB tn) | 55.77 | +4.29% YTD [13] |
| NPL ratio | 1.31% | flat [15] |
| Provision coverage | 214.38% | +78 bp [15] |
| CET1 / Tier 1 / Total CAR | 13.26% / 14.56% / 18.21% | all comfortable [15] |

Operating income at **+8.45%** is the strongest top-line growth print in years for the franchise, driven by both NII (+7.49%) and a step-up in non-interest revenue (+11.58%) [13]. Net profit growth at **+3.31% YoY** vs only +1.0% for FY25 marks a genuine inflection. Stock traded at **HK$7.22 on the print date (29 April 2026)** [22] and at **HK$7.03 on the StreetAccount takeaway date (1 May 2026)** [21].

## Capital action: TLAC build-out (February–April 2026)

In parallel with the strong Q1 print, ICBC executed the **RMB800 bn capital-and-TLAC issuance plan** approved by the NFRA in February 2026 [16]. Within April 2026 alone, the bank issued:
- **RMB50 bn Tier 2 capital bonds**
- **RMB30 bn undated Additional Tier 1 capital bonds**
- **RMB50 bn TLAC non-capital debt instruments** [16]

This filled the gap from the September 2025 USD preference-share retirement and aligned the capital stack with the G-SIB TLAC compliance trajectory.

## Stock price arc — the rerating

| Date | Price (HK$) | Event |
|---|---|---|
| 6 Jun 2025 | 5.90 | CLSA O-PF, TP HK$5.20 (downside bias) [1] |
| 30 Oct 2025 | ~6.05 | Q3 print: NP +3% YoY [17] |
| 5 Nov 2025 | n/a (A: Rmb8.13) | DBS cut to Hold [18] |
| Nov 12–20, 2025 | new 52-wk highs | sustained rally despite downgrade |
| 27 Mar 2026 | 6.62 | FY25 sustainability + results window [19] |
| 30 Mar 2026 | 6.54 | Street takeaways on FY25 [19] |
| 29 Apr 2026 | 7.22 | Q1 26 print [22] |
| 1 May 2026 | 7.03 | Q1 26 takeaways [21] |

The H-share rerated roughly **+19% over the 12 months**, plus the cash returned via the larger 2024 final dividend, the new 1H25 interim dividend, and (assuming the FY25 dividend tracks the +1.0% earnings growth) an upcoming 2025 final payment — a total return materially above the price move.

## What drove the sentiment shift

The narrative arc — from **"low-conviction Outperform"** to a **strong rerating into a Q1 inflection** — reflects four reinforcing forces:

1. **NIM stabilisation, not collapse.** Each report card showed NIM erosion *decelerating*: −12 bp HoH in 1H25 [4], −14 bp YoY for FY25 [10], and a +1 bp uptick to 1.29% in Q1 26 [13]. Sector commentary in March 2026 corroborated the easing pressure across all Chinese banks [20].

2. **Aggressive liability-side execution.** A **36 bp reduction in the average cost of deposits** for FY25 [12], plus disciplined refusal to engage in "price wars" on the funding side, did the heavy lifting that asset-yield management could not.

3. **Twice-a-year dividend cadence and capital recycling.** The **inaugural 1H25 interim dividend (RMB50.4 bn / Rmb0.1414 per share)** [5], combined with the redemption of the high-cost USD preference shares and the orderly TLAC build-out, materially improved the cash-return predictability profile [6][16].

4. **Top-line inflection in Q1 2026.** **Operating income +8.45% and NP +3.31%** [13][14] — the cleanest growth print in years — converted what had been a "stable yield play" into a name with visible earnings momentum.

The ICBC story in this 12-month window is therefore not about a thesis change in the business model — it is about the market gradually accepting that **the trough in profitability had been navigated** and that disciplined funding-cost management plus growing non-interest income could **deliver mid-single-digit earnings growth even with NIM still near 1.30%**. Valuation followed.

---

**Sources**

[1] CLSA — *China banks (Transfer of coverage)* (6 Jun 2025) — 607961079LinqAlpha.PDF (rating table: ICBC 1398 HK O-PF, TP HK$5.20 vs HK$5.90 spot; ICBC-A 601398 CH O-PF, TP Rmb6.70 vs Rmb7.09 spot)
[2] CLSA — *China banks (Transfer of coverage)* (6 Jun 2025) — coverage transferred to Ding Luo
[3] ICBC 1H 2025 Earnings Call — total assets RMB52 tn, NIM 1.3%, ROA 0.67%, ROE 8.82%, NPL 1.33%, CAR 19.54%, provision coverage 217.71%, NP RMB168.8 bn
[4] ICBC 1H 2025 Earnings Call — NIM down 12 bp YoY / 6 bp HoH; deposit cost −26 bp
[5] ICBC 1H 2025 Earnings Call — 2024 cash dividend RMB109.8 bn; 2025 interim cash dividend RMB50.4 bn; A/H share returns 2024 +44.8%/+36.4%
[6] ICBC 3Q 2025 Report — redemption of US$2.9 bn offshore preference shares on 23 Sep 2025
[7] ICBC 3Q 2025 Report — 2024 final dividend RMB58.7 bn paid Jul 2025; 2025 interim dividend RMB1.414/10 shares
[8] ICBC 3Q 2025 Earnings Call — inclusive-loan asset quality "modest rebound"; intelligent-control risk management
[9] ICBC 2025 Annual Results Announcement — NIM 1.28%, ROE 9.45%, ROA 0.72%, NPL 1.31%
[10] ICBC 2025 Annual Results Announcement — NIM −14 bp YoY, net interest spread −8 bp YoY
[11] ICBC 2025 Annual Results Announcement — NP +1.0% to RMB370.8 bn; non-interest income +11.8%
[12] ICBC 2025 Annual Results Announcement — loans +7.5%; avg deposit cost −36 bp to 1.36%
[13] ICBC 1Q 2026 Report — operating income +8.45%; NIM 1.29%; total assets RMB55.77 tn
[14] ICBC 1Q 2026 Report — NP attributable RMB86.94 bn vs RMB84.16 bn, +3.31%
[15] ICBC 1Q 2026 Report — NPL ratio 1.31%, coverage 214.38%, CAR 18.21%
[16] ICBC 1Q 2026 Report — RMB800 bn TLAC/capital approval Feb 2026; RMB50 bn T2 + RMB30 bn AT1 + RMB50 bn TLAC bonds issued Apr 2026
[17] StreetAccount — ICBC Q3 net income attributable CNY 101.81 bn, +3% YoY (30 Oct 2025)
[18] StreetAccount — ICBC downgraded to Hold from Buy at DBS Group (5 Nov 2025, CNY 8.13 reference)
[19] StreetAccount — Street Takeaways: ICBC FY earnings (30 Mar 2026, HK$6.54)
[20] StreetAccount — *Chinese banks see NIM pressures easing, but outlook remains challenging* (30 Mar 2026)
[21] StreetAccount — Street Takeaways: ICBC Q1 earnings (1 May 2026, HK$7.03)
[22] StreetAccount — ICBC Q1 net income attributable CNY 86.94 bn, +3% YoY (29 Apr 2026, HK$7.22)

## Citations

- [1] **607961079LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961079LinqAlpha.PDF>
- [2] **607961079LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607961079LinqAlpha.PDF>
- [3] **Industrial and Commercial Bank of China Limited, H1 2025** · external
- [4] **Industrial and Commercial Bank of China Limited, H1 2025** · external
- [5] **Industrial and Commercial Bank of China Limited, H1 2025** · external
- [6] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited Third Quarterly Report of 2025** · external
- [7] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited Third Quarterly Report of 2025** · external
- [8] **Industrial and Commercial Bank of China Limited, Q3 2025** · external
- [9] **Industrial and Commercial Bank of China Limited Class H: 2025 Annual Results Announcement** · external
- [10] **Industrial and Commercial Bank of China Limited Class H: 2025 Annual Results Announcement** · external
- [11] **Industrial and Commercial Bank of China Limited Class H: 2025 Annual Results Announcement** · external
- [12] **Industrial and Commercial Bank of China Limited Class H: 2025 Annual Results Announcement** · external
- [13] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [14] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [15] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [16] **Industrial and Commercial Bank of China Limited Class H: Industrial and Commercial Bank of China Limited First Quarterly Report of 2026** · external
- [17] **Industrial & Commercial Bank of China reports Q3 net income attributable CNY101.81B, +3% vs year-ago CNY98.56B** · news
- [18] **Industrial & Commercial Bank of China downgraded to hold from buy at DBS Group** · news
- [19] **Street Takeaways - Industrial & Commercial Bank of China FY earnings (HK$6.54, -0.08)** · news
- [20] **Chinese banks see NIM pressures easing, but outlook remains challenging** · news
- [21] **Street Takeaways - Industrial & Commercial Bank of China Q1 earnings (HK$7.03, 0.00)** · news
- [22] **Industrial & Commercial Bank of China reports Q1 net income attributable CNY86.94B, +3% vs year-ago CNY84.16B** · news

