Produced by | Miaotou APP
By Liu Guohui
Editor | Ding Ping
Photo | Visual China Group
A bank without an obvious label, and no single business line that ranks first in the industry, has become the "invisible winner" among bank stocks in recent years.
On September 1, CITIC Bank's A-share price hit an all-time high of RMB 8.98. By market close that day, its year-to-date gain stood at 17%. More notably, this marks the bank's fifth consecutive annual advance, a streak that began in 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 could not sustain the trend this year, with its stock price falling nearly 10% year-to-date, ranking near the bottom among bank stocks.
It's interesting to note that CITIC Bank is not a star bank in the traditional sense of the market. It doesn't have the strong retail moat of China Merchants Bank, nor the sustained high growth of Ningbo Bank, and it's not a high-dividend representative like Agricultural Bank.
Its defining trait, ironically, is moderation.
The low-key China CITIC Bank has managed to adapt to both bull and bear markets in recent years, but why is that?
No Champion-Level Metrics, But Strong 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 to reprice it over the past few years.
In terms of major business indicators in the first half of the year for listed banks, CITIC Bank is generally ahead, but not exceptionally so, with a pronounced mediocre characteristic.
This is reflected first in the choice of scale.
As of the first half of this year, CITIC 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 Shanghai Pudong Development Bank's 10.4 trillion yuan, falling from third to fourth among joint-stock banks. However, CITIC 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, does not one-sidedly pursue scale expansion for state-owned enterprises, 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)
The second characteristic is that the company's revenue and profit growth rates are among the top, but not absolutely leading.
Among the nine joint-stock banks, CITIC Bank's 3.1% revenue growth ranked fifth, trailing Huaxia Bank, China Merchants Bank, SPD Bank, and Minsheng Bank, while significantly outperforming Ping An Bank, Industrial Bank, Zheshang Bank, and Everbright Bank.
Given the high growth rates of Huaxia Bank and Minsheng Bank, as well as their poor performance and low base, China CITIC Bank's revenue ranking is actually quite good. Against the backdrop of most peers experiencing 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 Bank of Communications, 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.
The net interest margin was 1.62% in the first half of the year, ranking third among the nine joint-stock banks, lower than China Merchants Bank and Ping An Bank, but higher than Industrial Bank, Hua Xia Bank, Bank of Communications, China Minsheng Bank, Shanghai Pudong Development Bank, and China Everbright Bank. The net interest margin is at the upper level among joint-stock banks, although it faces narrowing pressure, having decreased by 1 basis point from the beginning of the year, the decline is smaller than that of China Merchants Bank, Industrial Bank, and Bank of Communications.
The interest-bearing liability cost ratio 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 liability cost control is a key advantage in maintaining its relatively good net interest margin.
In terms of asset quality, the overall situation is stable, at a higher level among joint-stock banks, with no deterioration, and a relatively thick provision buffer. The non-performing loan ratio is 1.15%, ranking fourth lowest among the nine joint-stock banks, better than Shanghai Pudong Development Bank, Bank of Communications, China Everbright Bank, China Minsheng Bank, and Hua Xia Bank, but higher than China Merchants Bank, Ping An Bank, and Industrial Bank.
With a provision coverage ratio of 203%, the bank ranks fourth among the nine joint-stock lenders, trailing China Merchants Bank, Industrial Bank, and Ping An Bank, while significantly ahead of Shanghai Pudong Development Bank, China Zheshang Bank, China Everbright Bank, Hua Xia Bank, and China Minsheng Bank. Its risk absorption capacity remains solid, with a provision buffer on the thicker side among joint-stock banks and slightly improved from the first quarter.
Overall, Citi 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 synchronized growth in revenue and net profit, with its three main sources of income maintaining positive growth. Although the net interest margin was under pressure, it was maintained at an industry-leading level due to relatively low liability costs. Asset quality remained stable, with a provision coverage ratio at a relatively good level. While these indicators are not the best in the industry when viewed individually, when combined, they form CITIC Bank's operational characteristic of "not easily making mistakes".
In comparison, CITIC Bank lacks the retail moat of Bank of China, and does not have a single business that is industry-leading, but its advantage lies in:
Profitability maintained steady growth, with less reliance on scale expansion;
The company's revenue structure is relatively balanced, with no significant dependence on a single business.
It has a clear advantage in terms of cost of liabilities and remains resilient in a cycle of narrowing interest rate spreads;
Asset quality remained stable, with no significant risk exposure.
The company's operating strategy is more conservative, with a greater emphasis on balancing risk and return.
The weakness lies in:
Fee income (wealth management) growth is moderate, with intermediary business capabilities weaker than China Merchants Bank and Industrial Bank.
The yield on interest-bearing assets is moderate, and asset-side profitability is not outstanding;
The provision coverage ratio is only at a medium level among peers, lacking excess 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 strengths or weaknesses. 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 market premium.
Why Does Imperfection Win?
If financial data explains why CITIC Bank is "hard to beat", 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 ten years, second only to China Merchants Bank and Ping An, and higher than Industrial Bank, China Everbright Bank, Hua Xia Bank, and Bank of Hangzhou, 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 over 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%, with net profit rising by 70%, outpacing revenue growth. This indicates that over the past decade, the bank has not solely relied on expanding its balance sheet to achieve scale, but has instead improved its asset quality and reduced risk costs, thereby increasing its net profit. This logic is consistent with the period from 2022 to 2026, where the focus is not on high growth, but rather on the continuous clearance of risks, leading to improved profitability.
In comparison to Bank of China, a gap exists over a ten-year dimension. Bank of China's net profit growth of 142% far exceeds CITIC's 70%, which explains why Bank of China 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 China Merchants Bank, which is even more excellent, has not.
CITIC Bank's most notable feature is its ability to remain relatively stable in different market environments. From a long-term perspective, its performance has been robust, with no major operational setbacks, but compared to industry leaders like China Merchants Bank, it lacks extremely strong business growth momentum and top-notch capabilities in specific areas, making it less likely to achieve high valuations in a growth-driven A-share market. However, it can still rise based on its fundamentals. In a bear market that emphasizes certainty and high dividends, its balanced and stable attributes will be revalued.
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 earnings 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 creating hidden risks.
Sun Deshun stepped down as president in February 2019; he 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 declined.
After the market style switched in 2022, the premium for growth was no longer given, and instead, trading focused on certainty, dividends, and low valuations, and CICC's long-term stable attributes began to be revalued.
At the beginning of 2022, the market's pricing of CITIC had already fully reflected 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 Pudong Development Bank, and its dividend payout 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 the industry leader, 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 like 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, such as wealth management and retail credit. Even if its fundamentals remain strong, if they fail to meet high expectations, a valuation correction will occur, which is the root cause of China Merchants Bank's decline in 2022-2023.
Since the start of 2025, the A-share market has been in a bull run, and bank stock investing is once again focused on the alignment of growth and valuation. Quality city commercial banks with solid earnings, including Bank of Ningbo, Bank of Jiangsu, and Bank of Qingdao, have seen their share prices strengthen. CITIC Bank's growth has been relatively solid among joint-stock banks, and its valuation remains lower than those high-growth quality banks, allowing its shares to continue climbing.
Why can it keep rising even in a bull market? At this stage, the market is focused on fundamentals, and CITIC Bank's performance remains 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 grew 14%. Over the same period, CMB's revenue fell 2% while net profit rose 8%. CITIC Bank also saw its NPL ratio trend steadily downward, maintained a stable dividend payout, and kept a 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 the market. If there were only stability without any marginal improvement, the market would not have experienced five consecutive years of growth, and would instead have remained in a state of low valuation and high dividend volatility.
In summary, China CITIC Bank lacks explosive growth momentum, and few of its individual businesses are ranked first in their respective segments. However, it has avoided major operational setbacks over the long term, and its profitability, asset quality, and dividend payouts have been maintained at a relatively acceptable level, making it a high-quality stock among its peers rather than a sector leader.
This trait itself cannot directly lead to a stable rise, but it resonates with the pricing logic, initial valuation, and market expectations of A-shares from 2022 to 2026, which is the core factor for the continuous rise.
Of course, this trait also sets a ceiling for its market performance.
Precisely because it lacks standout qualities, the rally is fundamentally a valuation repair rather than a growth-driven Davis double-click. It's unlikely to deliver the kind of explosive earnings growth typical of growth stocks. It also lacks a strong alpha business, so when the market rotates back to favoring high-growth names, it will once again become an unremarkable pick—able to rise, but not to lead the gains.
CITIC Bank's Advantage Is Also Its Ceiling
CITIC Bank's success stems precisely from its balanced approach. Yet the flip side of balance is the difficulty of building a decisive edge.
China CITIC Bank's profile—relatively stable profits, resilient net interest margins, and decent asset quality, but lacking strong growth, with retail and wealth management as weak points and ROE trailing China Merchants Bank by a clear margin—is the result of multiple compounding factors: resource endowment, customer base, business structure, strategic orientation, 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.
With the backing of China CITIC Bank's financial and industrial resources, and being tied to the central state-owned enterprises and industrial group ecosystem, it has obtained a large number of high-quality corporate clients and settlement deposits. The settlement funds of many central state-owned enterprises have been deposited, resulting in a large amount of corporate demand deposits, with corporate deposit costs lower than the industry average, forming the underlying source of liability cost advantages and the foundation of net interest margin resilience. The group possesses multiple licenses, including securities, trust, and leasing, and has comprehensive financial synergy, with additions to corporate investment banking, transaction banking, and financial market business, providing a stable source of non-interest income.
However, the group's inherent advantages are concentrated primarily on the corporate banking side. Retail customer base, retail channels, and retail culture are not traditional strengths of the group, and there is a lack of retail customer foundation. This has created a structural, inherent disparity between strong corporate banking and weak retail operations.
Group synergy is a double-edged sword, providing a stable foundation that enables CITIC Bank to outperform its peers in corporate customer acquisition, bond underwriting, and tech/green loans, but also limiting its growth potential. The synergy benefits are mainly felt in the corporate, investment banking, and large customer segments, while retail C-end customers have limited awareness of these benefits. 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 cultural emphasis on retail. Instead, CITIC Bank has chosen a balanced and stable approach, sacrificing the opportunity to make aggressive breakthroughs in a single area.
In terms of business structure, corporate banking is the ballast stone while retail banking is the weak link—a mix that ensures stability but makes it hard to stand out.
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 burden is relatively limited, making it less likely for profits to plummet. 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" growth.
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-bearing asset yields are only average among peers, making it hard to replicate the high ROE levels of banks like China Merchants Bank.
CITIC Bank's historical roots lie in corporate banking, with a late entry into retail and a retail transformation that lagged behind China Merchants Bank. This structural disadvantage persisted despite repeated retail strategy initiatives, yet the bank never managed to build the retail ecosystem and customer mindshare that CMB achieved.
Credit cards and consumer loans, which once focused on expanding scale, are now exposing retail credit risks during a cycle of shrinking resident balance sheets, temporarily dragging down retail profits. By 2025, the proportion of retail business profits will fall to single digits, and the growth of wealth management and fee-based intermediary businesses will be sluggish, lacking a second growth curve.
The result is that, for the public, 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 Shores Up Weaknesses, but Business Model Hard to Change
CITIC Bank has also become aware of its own issues, and while stability can withstand economic cycles, to achieve a higher valuation, it must make up for its growth shortcomings.
On May 20, CITIC Bank announced the appointment of Lü Tiangui, a retail banking veteran, as its new president. Lü previously led the expansion of CITIC's credit card business and oversaw its retail and private banking divisions, with expertise spanning wealth management, credit cards and digital retail. He also served as chairman of CITIC Trust, giving him familiarity with the group's integrated financial operations.
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.
CITIC Bank will keep corporate banking as the bedrock of its performance, without abandoning the segment. It will continue to deepen its focus on central state-owned enterprises, advanced manufacturing and new infrastructure, offering comprehensive financing, investment banking, transaction banking and bond underwriting. Low-yield, inefficient credit will be scaled back, with no pursuit of sheer volume.
Additionally, payment and settlement banking will be elevated to a strategic priority. Corporate settlement services build up low-cost deposits, which in turn consolidate an already strong liability cost advantage and hedge against the pressure from the fading dividend of maturing high-yield deposits. This is the core lever for stabilizing net interest margin.
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 Tianqi can best leverage his personal experience, but the current retail finance landscape is vastly different from when he was in charge of the credit card business. As a result, the path forward is clearly distinct from the old cycle, with retail credit risk taking priority and focusing on clearing existing risk, rather than aggressively expanding volume.
Wealth management, private banking, and AUM are the core drivers of retail business, leveraging the synergy between CITIC Securities and CITIC Trust. The focus is on tiered operations for high-net-worth and private banking clients, with wealth management intermediary services as a key area to boost 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.
In terms of asset-liability and interest rate spread strategy, management stated that it will no longer simply pursue a high ranking in the interest rate spread industry, but instead will strike a balance between interest rate spread and risk, and will not compromise on risk assets in order to maintain interest rate spreads. On the liability side, the company will continue to focus on acquiring low-cost deposits from corporate and retail settlement clients, while reducing high-cost deposits. On the asset side, it will moderately increase the proportion of high-quality medium- to long-term loans, using duration to hedge against the decline in loan yields, and will exercise caution when dealing with high-risk sectors.
Therefore, CITIC Bank's future performance profile will be a continuation of its existing character, maintaining an overall trait of "steady but not outstanding." Only partial weaknesses will be repaired, and a performance inflection point is unlikely to emerge. Profit will maintain steady single-digit growth with no explosive results, driven by interest margin resilience rather than balance sheet expansion.
There will be some marginal improvements, such as credit card risk continuing to clear, 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 strategic coherence is strong, and the high dividend and value bank labels will be further reinforced.
Long-standing weaknesses persist and will be difficult to change, including moderate yields on interest-bearing assets, a thin mass retail customer base, and capital constraints that cap the ceiling for expansion.
At the stock price level, CITIC Bank remains positioned as a stable value play — the "quality fixed income plus" among joint-stock banks. It will not evolve into a growth banking stock and is unlikely to command a growth premium. Its performance hinges on market style: it outperforms when the dividend/value style is in favor, and turns relatively mediocre when the growth narrative regains the spotlight.
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.
