Listed banks' retail loans shrink in H1, 28 see declines, as lenders reassess value of consumer business

For over a decade, the banking industry operated on a near-inviolable growth formula: acquire more customers, extend more loans, and expand retail operations. Mortgages, credit cards, consumer loans, and business loans progressively channeled household financing needs into banks. For banks, retail meant customer scale, higher loan yields, and the potential for cross-selling across a customer's entire financial relationship.

By 2026, that formula has begun to break down.

Retail Loan Contraction: A Sector-Wide Shift

In the first half of 2026, all 10 joint-stock banks that have disclosed their semi-annual reports recorded declines in personal loan balances compared to the beginning of the year — not a single one achieved positive growth. Among the 42 A-share listed banks, total personal loan balances stood at RMB 62.66 trillion, down 0.27% from the start of the year, with 28 banks reporting negative growth. In contrast, corporate loan balances reached RMB 121.37 trillion, up 7.90% over the same period.

This divergence — retail shrinking while corporate lending expands — signals a fundamental shift in bank credit asset allocation.

More significantly, this change is not solely driven by weak consumer demand. Some banks are actively de-emphasizing the pursuit of retail loan scale as an operational objective. China Merchants Bank (CMB) management has explicitly stated that, given current weak credit demand and elevated personal loan risk, the bank will not simply pursue scale expansion. Instead, it will focus on balanced development across quality, efficiency, scale, and structure, further downplaying requirements for retail loan growth.

This suggests banks are recalculating the value of retail customers.

01 Retail Hits the Brakes

The most notable change in this year's bank interim reports is not profit, but loan structure.

As of end-June, personal loan balances at 42 A-share listed banks fell 0.27% from the start of the year, while corporate loans rose 7.90%. Among these 42 banks, 28 saw negative personal loan growth, while all achieved positive corporate loan growth.

The shift is particularly concentrated among joint-stock banks:

• Hua Xia Bank: Personal loan balance fell to RMB 650.94 billion from RMB 698.77 billion at end-2025, a decline of approximately 6.8%. The share of personal loans in total lending dropped from 27.22% to 23.50%. Meanwhile, the non-performing loan (NPL) ratio for personal loans rose from 2.11% to 2.85%, an increase of 0.74 percentage points.

• China Minsheng Bank: Personal loans and advances fell 4.52% from end-2025 to RMB 1,603.07 billion. Corporate loans and advances rose 5.64% to RMB 2,906.93 billion. In terms of asset quality, the corporate loan NPL ratio improved from 1.24% to 1.17%, while the personal loan NPL ratio rose from 1.92% to 2.01%.

• China Everbright Bank: Average retail loan balance declined to RMB 1.44 trillion from RMB 1.49 trillion in the same period last year. The average yield on retail loans fell from 4.39% to 4.18%.

• China CITIC Bank: Personal loan balance stood at approximately RMB 2.33 trillion, down 1.53% from end-2025.

While the magnitude varies, the direction is highly consistent across institutions. Retail lending is transitioning from a scale-driven business to one focused on structural adjustment and risk management.

Hua Xia Bank's case is particularly illustrative. As of end-June, corporate loans accounted for 72.83% of total lending, up 3.88 percentage points from end-2025, while personal loans fell from 27.22% to 23.50%. Minsheng Bank showed a similar pattern: corporate loans grew 5.64%, while personal loans declined 4.52%.

This does not mean banks no longer need retail customers. Rather, loan balance is losing its status as the sole metric for retail business performance.

The most symbolic change occurred at China Merchants Bank. As of end-June, CMB's retail loan balance was RMB 3,680.03 billion, down 1.08% from end-2025, accounting for 49.38% of total loans. Corporate loan balance reached RMB 3,507.63 billion, up 9.08%. CMB management has begun actively de-emphasizing scale orientation.

This reflects a fundamental shift in banking logic: previously, the first question was "how many loans did we make?" Now, more banks are asking, "what is the value of this loan after adjusting for risk and capital costs?"

02 The Disappearance of 130 Million Credit Cards

Credit cards offer the most直观 example of this retail pivot.

As of end-Q2 2026, the number of credit cards and credit-debit combo cards nationwide fell to 677 million, a decline of approximately 10 million from end-Q1. For context, this figure peaked at 807 million at end-Q3 2022. Over four years, the stock of credit and combo cards has shrunk by approximately 130 million.

This change can no longer be explained by ordinary quarterly fluctuations.

Previously, credit card operations centered on card issuance volume, customer numbers, and transaction scale. More cards meant more potential customers and greater future monetization through installment plans, consumer finance, and cross-selling.

That logic has now changed, as confirmed by bank interim reports:

• China Minsheng Bank: Credit card overdraft balance fell by RMB 26.00 billion from end-2025 to RMB 406.46 billion. Total retail loans declined 4.24%.

• China CITIC Bank: Credit card loan balance fell approximately 2% from end-2025 to RMB 453.85 billion. Consumer loan balance dropped 11.72% to RMB 248.74 billion, with the consumer loan NPL ratio rising to 3.31%.

• China Everbright Bank: Average retail loan yield declined from 4.39% to 4.18%.

Banks face a triple squeeze: declining scale, falling yields, and rising NPL ratios in certain sub-segments. This explains why banks are increasingly prioritizing customer quality over quantity. The goal is no longer simply to expand high-risk asset exposure for the sake of customer numbers and loan volume.

Credit cards are transitioning from a "land-grab" business to one focused on managing existing stock.

03 Retail Is Not Uniformly Shutting Down

However, interpreting this shift simply as "households are not borrowing" would be inaccurate. What is actually happening is a divergence in household credit structure.

People's Bank of China data shows that in H1 2026, loans to enterprises and institutions increased by RMB 11.13 trillion, while household loans decreased by RMB 366.8 billion. Within this:

• Household business loans increased by approximately RMB 689.0 billion, indicating that personal financing needs related to production and operations still exist.
• Consumer loans (excluding personal housing loans) decreased by approximately RMB 340.0 billion in H1.

Housing loans face the greatest pressure. As of end-June, national personal housing loan balances stood at RMB 36.29 trillion, a decrease of RMB 716.3 billion in H1.

Thus, today's retail loan contraction is not uniform across all product types. Instead, a clear divergence is emerging: housing loans are under pressure, consumer loans are contracting, credit cards are being de-stocked, while business loans maintain some growth. This is a more accurate picture than simply "households aren't borrowing."

In recent years, after housing loan growth slowed, consumer loans, credit cards, and business loans were viewed by many banks as new retail growth areas. Now, some of these paths are also coming under pressure.

Consumer loans and credit cards depend more on individual cash flow and credit status, while business loans rely more on the income and operational stability of business entities. When consumer spending意愿, income expectations, or business cash flows change, these assets become more exposed to risk.

Bank interim reports show this pressure is already reflected in asset quality:

| Bank | Personal Loan NPL Ratio (End-2025) | Personal Loan NPL Ratio (End-H1 2026) | Change | |------|-----------------------------------|--------------------------------------|--------| | Hua Xia Bank | 2.11% | 2.85% | +0.74 pp | | China Minsheng Bank | 1.92% | 2.01% | +0.09 pp | | China CITIC Bank | — | 1.33% | — |

CITIC Bank's structural changes are particularly revealing. As of end-June, its overall personal loans declined 1.53%, but housing loans and business loans still showed slight growth. Credit card loans and consumer loans decreased by RMB 9.24 billion and RMB 33.04 billion, respectively.

This indicates banks are not applying a blanket approach to retail. More precisely, they are reordering retail assets: determining which businesses can still cover risks, which need主动 reduction, and which customers are worth continuing to serve. The change in retail lending is therefore not simply a "slowdown" but a structural revaluation.

04 Corporate Lending Takes the Lead, But Is No Safe Haven

With retail loan contraction, a practical question emerges: where is new credit being directed?

Based on listed banks' asset structures, the answer is increasingly clear — more new loans are flowing into corporate lending. As of end-June, corporate loan balances at 42 A-share listed banks reached RMB 121.37 trillion, up 7.90% from the start of the year, while personal loans declined 0.27%. All 42 listed banks achieved positive corporate loan growth from the start of the year.

However, this does not mean that "money exiting retail" mechanically flows into corporate lending. Rather, in the allocation of new credit resources, corporate business importance has significantly increased.

China CITIC Bank is a typical case. As of end-June, corporate loan balance was approximately RMB 3.51 trillion, up 6.52% from end-2025, while personal loans declined 1.53%. Key areas including medium-to-long-term manufacturing loans, green credit, private economy, strategic emerging industries, and inclusive small-micro loans maintained growth, with medium-to-long-term manufacturing loans rising 8.51% from the start of the year.

Hua Xia Bank: Corporate loans accounted for 72.83% of total lending as of end-June, up 3.88 percentage points from end-2025. Manufacturing loans accounted for 12.15%, up 0.31 percentage points.

China Minsheng Bank continued increasing manufacturing credit, with manufacturing loan balances reaching RMB 547.38 billion as of end-June, an increase of RMB 47.35 billion from end-2025.

Across the banking system, key sectors continue to receive more credit resources. As of end-June, technology loans, green loans, inclusive loans, elderly care industry loans, and digital economy industry loans all maintained relatively fast growth.

These changes reflect two different demand curves. On one side, household sector leverage意愿 is weak, and real estate-related credit remains in adjustment. On the other, manufacturing, technological innovation, and small-micro enterprises still have policy-guided financing needs.

But corporate lending is not a cost-free blue ocean. As of end-Q2 2026, the commercial banking net interest margin stood at only 1.41%, up just 1 basis point from Q1. Meanwhile, the weighted average interest rate on newly issued corporate loans in June was approximately 3.0%, down about 20 basis points year-on-year.

Banks thus face a new dilemma: on the retail side, asset quality pressure is rising; on the corporate side, loan pricing continues to be compressed. Previously, some banks could use relatively higher-yielding retail loans to partially offset low corporate asset rates. That balancing line is now narrowing.

05 From "Loan Business" to "Customer Business"

If the decline in retail loans were merely a balance sheet number, the truly noteworthy development would be the potential change in banking logic.

Previously, the core banking model was simple: take deposits, issue loans, earn the spread, and expand the balance sheet. That path is becoming increasingly difficult. On one end, retail loan growth is sluggish; on the other, corporate loan pricing is under pressure. Meanwhile, corporate financing channels are becoming more diverse.

PBOC data shows that in H1 2026, RMB loans increased by RMB 10.72 trillion, while bond financing increased by RMB 8.51 trillion. The average interest rate on newly issued corporate loans in June was approximately 3.0%. This means loans remain important but are no longer the only answer for corporate financing.

Competition among banks is therefore shifting from "competing for a single loan" to "competing for a customer's entire financial value."

China Merchants Bank provides the clearest example. As of end-June, CMB's retail loan balance was RMB 3,680.03 billion, down 1.08% on a comparable basis from end-2025. However, its managed retail customer total assets (AUM) reached RMB 18.44 trillion, up 7.96% from end-2025. Retail financial business revenue in H1 was RMB 96.82 billion, accounting for 54.34% of the group's total revenue. Retail wealth management fee and commission income reached RMB 14.07 billion, up 24.81% year-on-year.

More notably, CMB's retail financial business pre-tax profit was RMB 42.89 billion, down 17.58% year-on-year, while wholesale financial business pre-tax profit was RMB 45.70 billion. This means retail revenue still exceeds half of total revenue, but its pre-tax profit has been overtaken by wholesale financial business.

China Minsheng Bank data is equally telling. As of end-June, its managed retail customer AUM reached RMB 3.54 trillion, up 7.65% from end-2025. Retail savings deposits grew 4.12%, while retail loans declined 4.24%. Meanwhile, wealth management fee income reached RMB 3.01 billion, up 47.66% year-on-year.

Asset-side contraction coexists with liability-side and wealth management expansion. This provides a more important answer than "retail loans are declining": banks have not abandoned households; they are redefining what constitutes a valuable retail customer.

The old retail bank was更像 a large personal credit supermarket — mortgages, credit cards, consumer loans, business loans — maximizing the number of loan products per customer. Now, it is更像 a platform centered on the customer's entire assets and financial needs. A customer can contribute loans, deposits, AUM, payments, funds, insurance, wealth management, and even private banking services.

Consequently, how banks measure retail customers is changing. Previously, the question was: "How much more can this customer borrow?" Now, increasingly: "What comprehensive value can this customer create for the bank?"

This is the truly noteworthy aspect of the current retail loan contraction. It does not necessarily mean banks are abandoning retail. More likely, it means the old formula of "retail bank = loan bank" is becoming obsolete. When scale is no longer the only answer, what banks truly need to manage is no longer just a loan contract, but a customer, their assets, and the entire financial relationship built around them.

The real inflection point for retail banking may not be that loans have decreased, but that loans are no longer everything.