Chinese banks post solid Q2 but loan growth hits slowest pace since 2019

Other non-interest income remained a key profit driver of banks in Q2.

Chinese banks continued to report solid results in Q2 2026, but loan growth was slow and fee income ‘disappointed’, said CreditSights.

The banks are expected to continue enjoying government support and strong demand from domestic investors, it said in a research report on 1 September 2026.

Loan growth came softer than expected during the first half period of the year, with gross loans just rising 4% to 6% year-to-date, according to data from CreditSights by Fitch Solutions.

This marks the slowest first half growth since at least 2019, CreditSights said. The quarterly loan growth of between 0.5% to 1.4% was also driven largely by discounted bills rather than real economy credit demand, it said.

Fee income was also disappointing in the second quarter, CreditSights said. It declined at three banks and rose only modestly at the other two. Deposit growth also came under pressure in Q2 2026, it said.

Other non-interest income remained a key profit driver of banks in Q2, with trading and investment gains benefitting from declining market interest rates. Growth was partially inflated by gains on the disposal of previously acquired high-yield bonds.

For the full-year, fee income performance is likely to be mixed, CreditSights said, with banks having stronger international franchises and cross-border businesses better positioned to withstand headwinds from persistent weakness in domestic consumption and corporate finance activity.

Credit costs are also expected to rise as banks utilize stronger revenue generation to strengthen provision coverage ratios.

Growth in other non-interest income is likely to remain robust as domestic interest rates continue their gradual decline, CreditSights added.

“We expect mid-to-high single-digit growth in net interest income, supported by modest NIM expansion and mid-to-high single-digit loan growth,” it said.