Produced by | Miaotou APP
Author | Liu Guohui
Editor | Ding Ping
Header image: Visual China
A bank with no defining label and no single business line ranked first in its industry has nonetheless emerged as a "hidden winner" among banking stocks over the past few years.
On September 1, the A-share price of CITIC Bank reached a historic high of 8.98 yuan. As of the close of trading that day, the stock had risen 17% so far this year. More noteworthy is that this marks the fifth consecutive year that CITIC Bank has achieved an annual increase since 2022.
This is not easy to achieve among bank stocks. Among the 42 A-share bank stocks, only CITIC Bank, Bank of China, and China Construction Bank were able to do so during the same period.
Recognized excellent banks such as China Merchants Bank and Ningbo Bank, however, did not experience such stable stock price trends. China Merchants Bank fell by over 20% in both 2022 and 2023. Ningbo Bank also declined in those two years. Agricultural Bank of China, which had performed strongly in recent years, saw annual gains for four consecutive years from 2022 to 2025, but this year it was unable to hold up, with its stock price falling nearly 10% year-to-date, ranking near the bottom among bank stocks.
Interestingly, China CITIC Bank is not a star bank in the traditional market sense. It lacks the formidable retail moat of China Merchants Bank, has not sustained the high growth trajectory of Ningbo Bank, and does not represent the high-dividend profile of Agricultural Bank of China.
Its biggest feature, ironically, is being middling.
CITIC Bank keeps a low profile, yet in recent years it has proven adaptable to both bull and bear markets. Why is that?
No Champion Specs, but Solid Stability
While Citi Bank may not be the champion in terms of individual metrics, it rarely falls out of the top ranks, and it is this balance that has been the basis for the capital market's revaluation of it in recent years.
Judging from the major business indicators of listed banks in the first half of the year, CITIC Bank is generally ahead in most areas, but not exceptionally so, with a pronounced mediocre characteristic.
This is first reflected in the choice of scale.
As of the first half of this year, Citi Bank's assets reached 10.38 trillion yuan, lower than China Merchants Bank's 13.79 trillion yuan and Industrial Bank's 11.46 trillion yuan, and was slightly surpassed by the revived Shanghai Pudong Development Bank's 10.4 trillion yuan, falling from third to fourth among joint-stock banks. However, Citi Bank's revenue and net profit are still significantly higher than those of Shanghai Pudong Development Bank, remaining at the forefront of joint-stock banks.
In the first half of the year, the asset scale of CITIC Bank grew at a slower pace, not only lower than China Merchants Bank and Industrial Bank, but also lower than Shanghai Pudong Development Bank. This is consistent with the tone of the management at the mid-term performance meeting, which does not pursue short-term flashy data on the books, does not one-sidedly pursue scale expansion for public appearance, prioritizes RAROC (Risk-Adjusted Return on Capital), and rejects low-yield and ineffective scale. Currently, in terms of net interest margin, CITIC Bank is 19 basis points higher than Shanghai Pudong Development Bank, and its revenue is relatively less dependent on asset expansion.
(Source: Company Announcement)
Second, revenue and profit growth rank near the top, though not by a commanding lead.
Among the nine listed banks, CITIC Bank's 3.1% revenue growth rate ranked fifth, lower than Hua Xia Bank, China Merchants Bank, Shanghai Pudong Development Bank, and China Minsheng Bank, but significantly better than Ping An Bank, Industrial Bank, Bank of Communications, and China Everbright Bank.
Given the high growth rates of Huaxia Bank and Minsheng Bank's poor performance and low base, China CITIC Bank's revenue ranking is actually quite good. Against the backdrop of most peers' weak or even negative growth, China CITIC Bank achieved steady positive growth, demonstrating strong operational resilience.
In terms of net profit growth, among the 9 joint-stock banks, CITIC Bank's net profit growth ranked third, with a relatively impressive performance, second only to Shanghai Pudong Development Bank and Ping An Bank, and higher than China Merchants Bank and Zhejiang Commerce Bank, and far surpassing Industrial Bank, China Minsheng Bank, Hua Xia Bank and Everbright Bank. CITIC Bank's profitability is at a leading level among joint-stock banks, with relatively good momentum for profit growth.
Third, in terms of revenue structure, all aspects are working together, with no particularly strong growth engine, but also no obvious drag.
Net interest income grew steadily, with a 2.7% increase, ranking sixth among the nine joint-stock banks, lower than Hua Xia Bank, Shanghai Pudong Development Bank, and China Minsheng Bank, but higher than Ping An Bank, Industrial Bank, and Bank of Communications.
Net fee income growth was 2.4%, ranking fifth among the nine joint-stock banks, with a mediocre performance that was lower than Zhejiang Commerce Bank, Industrial Bank, China Merchants Bank and Hua Xia Bank, but better than Ping An Bank, China Minsheng Bank, Shanghai Pudong Development Bank and Everbright Bank.
Other non-interest income increased by 4.9%, ranking fourth among the nine joint-stock banks, with a relatively good growth performance, lower than Hua Xia Bank, Ping An Bank, and Bank of Communications, but significantly better than China Merchants Bank, Industrial Bank, China Minsheng Bank, Shanghai Pudong Development Bank, and China Everbright Bank. Investment and other non-interest businesses are important drivers of CITIC Bank's revenue growth, outperforming most of its peers.
Fourth, the net interest margin is not the highest, but its resilience is relatively strong.
Net interest margin stood at 1.62% in the first half, ranking third among nine joint-stock banks. That puts it below China Merchants Bank and Ping An Bank but above Industrial Bank, Huaxia Bank, China Zheshang Bank, China Minsheng Bank, Shanghai Pudong Development Bank and China Everbright Bank. The margin sits in the upper-middle tier of joint-stock banks. While it faces narrowing pressure — down 1 basis point from the start of the year — the contraction is smaller than at China Merchants Bank, Industrial Bank and Zheshang Bank.
The cost of interest-bearing liabilities was 1.37%, ranking second-lowest among the nine joint-stock banks, only higher than China Merchants Bank, and significantly lower than Industrial Bank, China Minsheng Bank, Bank of Communications, and China Everbright Bank. CITIC Bank's outstanding performance in controlling liability costs is a key advantage in maintaining its relatively good net interest margin.
Finally, on asset quality, the overall position remains stable, ranking in the upper-middle tier among joint-stock banks with no signs of deterioration and a solid provision buffer. The non-performing loan ratio stands at 1.15%, the fourth lowest among the nine joint-stock banks, better than Shanghai Pudong Development Bank, China Zheshang Bank, China Everbright Bank, China Minsheng Bank, and Huaxia Bank, but higher than China Merchants Bank, Ping An Bank, and Industrial Bank.
The provision coverage ratio stood at 203%, ranking fourth among nine joint-stock banks, lower than China Merchants Bank, Industrial Bank, and Ping An Bank, but significantly higher than Shanghai Pudong Development Bank, Bank of Communications, China Everbright Bank, Hua Xia Bank, and China Minsheng Bank. The bank's risk resistance capability is relatively strong, with a thick provision safety cushion among joint-stock banks, which has slightly increased from the first quarter.
Overall, CITIC Bank is not the strongest performer among joint-stock banks in terms of business operations, but its biggest characteristic is its balance.
In the first half of the year, CITIC Bank achieved simultaneous growth in revenue and net profit, with all three major income streams posting positive gains. Although net interest margin remained under pressure, the bank maintained a mid-to-upper tier position within the industry thanks to its relatively low liability costs. Asset quality stayed stable, with provision coverage at a healthy level. Individually, none of these metrics ranks first in the industry, but taken together, they form an operational profile for CITIC Bank characterized by a "low propensity for missteps."
By comparison, China CITIC Bank lacks the retail moat that China Merchants Bank has built, and no single business line leads the industry. But its edge lies in this:
Profits are growing steadily with less reliance on scale expansion.
The revenue structure is relatively balanced, with no obvious dependence on a single business.
A clear liability cost advantage, sustaining resilience through the interest margin downcycle;
Asset quality remained stable, with no significant risk exposure.
The company's operational strategy is more conservative, with a greater emphasis on balancing risk and return.
The weakness lies in:
Fees (wealth management) grew at a moderate pace, with weaker intermediary business capabilities compared to Bank of China and Industrial Bank.
The yield on investment assets is moderate, and the profitability of the asset side is not outstanding;
The provision coverage ratio is only at a medium level among peers, lacking excessive risk buffers.
Overall, CITIC is in the middle tier, below China Merchants Bank, on par with Industrial Bank, and above Shanghai Pudong Development Bank, with no standout performance in any area. Its non-performing loan ratio is cleaner than Shanghai Pudong Development Bank's, its net interest margin is more stable than Industrial Bank's, and its corporate resources are slightly better than China Merchants Bank's, but none of these advantages are scarce enough to warrant a premium from the market.
Why Being Average Can Make You a Winner
If financial data explains why CITIC Bank is "hard to lose," then its long-term growth and cyclical performance explain why the market is willing to continue giving it a high valuation.
From a 10-year perspective, observing the growth capabilities of A-share listed banks, it can be seen that China CITIC Bank is also at a leading level, with revenue and net profit growth rates similar to those of Industrial Bank, but China Merchants Bank remains the benchmark with the strongest growth. In comparison, China CITIC Bank also has growth, but it is not as prominent as that of China Merchants Bank.
(Data source: the company; comparison of nearly ten years of performance growth of listed shares)
After a decade, CITIC Bank remains one of the top-performing joint-stock banks, with a 70% increase in net profit over the past 10 years, second only to China Merchants Bank and Ping An, and higher than Industrial Bank, Everbright Bank, Hua Xia Bank, and Bank of Communications, far outperforming China Minsheng Bank and Shanghai Pudong Development Bank. Its revenue data also ranks among the top, it may not be the one with the strongest explosive growth force in the past decade, but its long-term profitability has continued to rise, without experiencing a decline in profit levels, which is a very important foundation. In contrast, China Minsheng Bank and Shanghai Pudong Development Bank have seen their profits shrink over the past decade, which is the root cause of the valuation gap between them.
CITIC Bank's revenue increased by 38.17%, and its net profit rose by 70%, with profit growth outpacing revenue growth. This indicates that over the past decade, the bank has not solely relied on expanding its balance sheet to increase scale, but has instead improved its asset quality and reduced risk costs, thereby increasing its net profit. This logic is consistent with that of 2022-2026: it is not about high growth, but rather about the continuous clearance of risks leading to improved profitability.
In comparison with China Merchants Bank, the gap over a decade is objectively present. China Merchants Bank's net profit growth of 142% far exceeds that of CITIC Bank's 70%, which explains why China Merchants Bank has long enjoyed a valuation premium historically.
Such performance characteristics, combined with the bull-bear reversals of recent years, can explain why CITIC Bank has been able to rise continuously over the past five years, while the more excellent China Merchants Bank has not.
CITIC Bank's defining trait is its ability to remain relatively stable across different market environments. Over a longer time horizon, it delivers steady long-term performance without major operational missteps. However, compared with leaders like China Merchants Bank, it lacks the same explosive business momentum and top-tier capabilities in any single area. In an A-share market favoring growth styles, it is unlikely to command a high valuation, yet it can still rise on the strength of its fundamentals. In a bear market that prizes certainty and high dividends, its balanced, steady profile tends to be re-rated.
Looking back on these years:
During the growth-style bull market of 2019-2021, high-quality growth banks, including China Merchants Bank and Bank of Ningbo, accumulated significant gains. However, in this bull market, China CITIC Bank was affected by the legacy issues left by its former president, Sun Deshun, which led to weaker profit growth. During Sun's tenure, particularly in the later period, there were issues such as irregular lending to the real estate sector and a decrease in manufacturing industry loans, resulting in some credits turning non-performing and hiding potential risks.
Sun Deshun stepped down as president in February 2019 and was investigated in March 2020, after which problems were exposed and the handling of bad debts affected performance. In 2020-2021, the stock price of CITIC Bank fell.
After 2022, the market style shifted away from rewarding growth premiums toward trading certainty, dividends, and low valuations, prompting a repricing of CITIC's long-term stability.
At the beginning of 2022, the market's pricing of CITIC had already fully incorporated pessimism, with a price-to-book ratio of only 0.4-0.5 times, deeply undervalued, and the market did not give it a growth premium. Instead, market expectations were that it would not have a major blowup, its profits would not retreat like those of Minsheng Bank and Pufa Bank, and its dividend payouts would not decline sharply. Its characteristic of being "stable but not outstanding" was not a disadvantage in the bear market bottom phase, as it did not need to be at the top of the industry, and as long as it did not fall short of the very low market expectations, it would create a gap between expectations.
High-growth banks such as China Merchants Bank and Ningbo Bank have fallen for two consecutive years. China Merchants Bank itself is a prominent leader, and the market has given it high growth expectations and a valuation premium. However, the macro environment has impacted its advantageous business segments (wealth management, retail credit), and even if its fundamentals remain strong, if they fail to meet high expectations, a valuation slump will occur, which is the root cause of China Merchants Bank's correction in 2022-2023.
Since 2025, the A-share market has been bullish, and bank stock investments have been focused on matching growth and valuation, with quality city commercial bank stocks such as Ningbo Bank, Jiangsu Bank, and Qingdao Bank performing well and rising strongly. Among joint-stock banks, China CITIC Bank's growth has been relatively good, and its valuation is lower than that of these high-growth, quality banks, allowing it to continue to rise.
Why would a stock keep climbing even in a bull market? At this stage, the market is focused on earnings, and CITIC Bank's results remain solid. Over the 2022-2025 period, the banking sector was characterized by strong corporate banking but headwinds in retail. CITIC Bank's earnings growth actually outpaced China Merchants Bank's: its 2025 revenue did not decline versus 2022, and profit rose 14%. Over the same period, CMB's revenue fell 2% while net profit grew 8%. CITIC Bank also maintained a declining non-performing loan ratio, stable dividend payout, and consistent management strategy.
It is precisely this steady, incremental improvement that has attracted long-term configuration funds, such as insurance capital and social security funds, to continuously buy in, providing a sustained bottom line for investment. If there were only stability without any marginal improvement, the market would not have seen a five-year continuous rise, and would instead have remained in a state of low valuation and high dividend fluctuations.
In summary, China CITIC Bank lacks explosive growth momentum, and few of its individual businesses are ranked first in their respective segments, but it has avoided major operational setbacks over the long term, maintaining acceptable levels of profitability, asset quality, and dividend payouts, making it a high-quality stock among its peers rather than a sector leader.
This trait alone does not directly lead to steady gains, but it happens to resonate with the pricing logic, initial valuations, and market expectations of A-shares from 2022 to 2026—which is the core factor behind the sustained rally.
Of course, this trait also sets a ceiling for its market performance.
Because it is not outstanding enough, its market trend is essentially a valuation correction, not a growth-driven surge like the Davis Double Click. It is difficult for it to experience a rapid and explosive increase in performance like growth stocks. It lacks a strong alpha business, and when the market style shifts back to pursuing high growth in the future, it will once again become a less eye-catching target, and although it can still rise, it will not be a leader.
CITIC Bank's Strength Is Also Its Ceiling
CITIC Bank emerged as a winner precisely because it chose a balanced path. But the flip side of balance is that it becomes difficult to build an extreme competitive edge.
CITIC Bank's characteristics, including relatively stable profits, strong net interest margin resilience, and decent asset quality, but lacking strong growth, with retail and wealth management being weaknesses, and an ROE that clearly lags behind China Merchants Bank, are the result of multiple factors combining, including resource endowment, customer base, business structure, strategic direction, and external cyclical constraints.
The group's endowment has established the corporate tone for CITIC Bank, and also brought natural advantages on the liability side.
Backed by CITIC Bank's financial and industrial resources, and anchored in an ecosystem of central state-owned enterprises and industrial groups, the bank has secured a large base of high-quality corporate clients and settlement deposits. The settlement funds of numerous SOEs and state-backed enterprises generate corporate demand deposits, whose funding costs run below those of peers. This cost advantage on the liability side forms the foundation of the bank's interest margin resilience. With a diversified license portfolio spanning securities, trust, and leasing, the group leverages comprehensive financial synergies that bolster its corporate investment banking, transaction banking, and financial markets businesses, providing a stable source of non-interest income.
The group's inherent advantages are mainly concentrated in the corporate sector, but its retail customer base, retail channels, and retail culture are not the group's traditional strong points, lacking the soil for retail customer growth, resulting in a structural congenital difference between strong corporate and weak retail businesses.
Group synergy is a double-edged sword, on the one hand, it provides a stable foundation, enabling the bank to outperform its peers in corporate customer acquisition, bond underwriting, and tech/green loans. On the other hand, it limits the growth potential of CITIC Bank. The synergy benefits are mainly seen in the corporate, investment banking, and large customer segments, but are less perceived by retail C-end customers. Additionally, the allocation of resources within the group tends to be conservative, unlike Ping An's bold transformation of its retail business or China Merchants Bank's successful cultural shift towards retail. Instead, CITIC Bank has chosen a balanced and stable approach, sacrificing the opportunity to excel in a single area.
In terms of business structure, the corporate sector is the mainstay, while retail is the weakness, making it stable but difficult to achieve extreme excellence.
The corporate client base is mainly composed of central enterprises, local state-owned enterprises, and high-quality manufacturing industry leaders, with overall superior customer qualifications. Historically, there has been no large-scale expansion into lower-tier markets like Minsheng and Pufa, and the risk legacy is relatively limited, making it unlikely to see a significant collapse in profits. During economic downturns, the financing needs of central state-owned enterprises remain relatively stable, allowing corporate business to smooth out cyclical fluctuations, safeguard the bottom line of profits, and achieve "stable" performance.
However, the pricing for state-owned enterprise loans is generally too low, making it difficult to achieve high yields on the asset side, which explains why, despite CITIC's low debt costs, its interest-earning asset yields are only average among its peers, making it hard to replicate the high ROE levels achieved by China Merchants Bank.
CITIC Bank's historical starting point was corporate banking, with retail banking starting later, and its retail transformation began later than China Merchants Bank. This inherent deficiency has meant that despite repeatedly proposing retail strategies, it has never formed a retail ecosystem and customer mindset like that of China Merchants Bank.
Credit cards and consumer loans had previously focused on expanding in scale, but during the cycle of shrinking resident balance sheets, retail credit risk was exposed, temporarily dragging down retail profits. By 2025, the proportion of retail business profits had fallen to single digits, and the growth of wealth management and fee-based intermediary businesses was sluggish, lacking a second growth curve.
The result is that, for the public sector, maintaining a bottom line guarantees stability, but retail cannot produce extremely strong alpha, making it difficult for the overall performance to stand out in the sector.
CITIC Bank Works to Address Weaknesses, but Struggles to Change Business Model
CITIC Bank has also become aware of its own issues, and while stability can withstand economic cycles, in order to achieve a higher valuation, it must make up for its growth shortcomings.
On May 20, CITIC Bank announced the appointment of Lü Tianguo, who has a background in retail business, as its new president. Lü Tianguo has led the expansion of CITIC Credit Card, overseen retail banking and private banking, and is familiar with wealth management, credit cards, and digital retail. He has also served as chairman of CITIC Trust, giving him a deep understanding of the group's comprehensive financial services.
The mid-August performance meeting will be its first public and complete strategic statement, with an overall tone of not overturning the existing strategy, but rather continuing and upgrading the "三三战略 (three excellences, three leaderships)", emphasizing the importance of telling a consistent story in operations, strategic stability in the face of cyclical uncertainty, not pursuing short-term superficial gains, and focusing on ROE and RAROC, while remaining committed to its public business foundation.
Thus, the corporate business will remain the foundation of CITIC Bank's performance, and it will not be abandoned. The bank will continue to deeply cultivate its business with central enterprises, state-owned enterprises, advanced manufacturing, and new infrastructure, while providing comprehensive financing, investment banking, transaction banking, and bond underwriting services. Low-yield and ineffective credit will be compressed, and the bank will not pursue scale for its own sake.
In addition, the payment settlement bank will be elevated to a strategic level, with corporate settlement deposits accumulating low-cost deposits to consolidate the already strong liability cost advantage, and to hedge against the pressure of future high-interest deposit redemptions and the decline of interest spreads, which is the core focus of stabilizing net interest margins.
The focus of retail business has shifted from the scale of retail credit to wealth management, private banking, and assets under management (AUM), and due to the unchanged macro environment, the credit side will still be cautious.
This is the sector where Lü Tianguo can leverage his personal experience the most, but the current retail finance landscape is vastly different from when he was in charge of the credit card business. As a result, the approach is distinctly different from the old cycle, with retail credit risk taking priority and focusing on clearing existing risk, rather than aggressively expanding quantities.
Wealth management, private banking, and AUM are the core drivers of retail business, leveraging the synergy between CITIC Securities and CITIC Trust to implement tiered operations for high-net-worth and private banking clients, and taking wealth management intermediary business as a breakthrough to increase fee income. However, CITIC's weaknesses in retail customer base, branch network, and retail culture are objectively present, making it difficult to catch up with China Merchants Bank.
On balance sheet and interest margin strategy, management stated that they will no longer simply chase industry rankings for interest margins, but instead seek a balance between margins and risk. They will not sacrifice asset quality to protect spreads by moving down the risk curve. On the liability side, they will continue to pursue low-cost deposits from corporate and retail settlement accounts while reducing high-cost deposits. On the asset side, they will appropriately increase the share of quality medium- to long-term loans, using duration to hedge against declining loan yields, and will remain cautious toward high-risk sectors.
CITIC Bank's future performance characteristics will continue to be based on its existing foundation, maintaining an overall "stable but not outstanding" trait, with only partial weaknesses being addressed, making it difficult to achieve a performance inflection point. Profit will maintain stable single-digit growth, without explosive performance, driven by the resilience of net interest margins rather than scale expansion.
There will be some marginal improvements, such as credit card risk continuing to be cleared, and private banking and AUM driving a recovery in wealth management fee growth, although this will be an improvement rather than a significant catch-up. The proportion of non-interest income will increase, and the revenue structure will become more balanced. The strategy has strong continuity, and the high dividend and value bank labels will be further reinforced.
Long-term weaknesses still exist and are difficult to change, including the medium yield of interest-earning assets; a weak foundation of mass retail customers; and capital constraints that suppress expansion ceilings.
In terms of stock price, Citi Bank remains positioned as a stable value target, a "high-quality fixed income+" among listed banks, and is unlikely to evolve into a growth-type bank stock, making it difficult to obtain a growth premium. The trend relies on market style, performing well when the dividend style is dominant, but relatively mediocre when the growth narrative returns.
CITIC Bank may never be the champion among joint-stock banks, but it has proven one thing: in a market that increasingly values certainty, having no obvious weaknesses is a rare ability in itself.
