• The banking sector (nine commercial banks and their subsidiaries) closed out 2025 by carefully sustaining performance, as evidenced by a second consecutive year of slowing net profit. Growth in non-interest income helped mitigate the impact of the first decline in net interest income in four years. This downturn occurred amid mounting pressure from domestic interest rate cuts and loan growth contraction.
• Looking ahead to 2026, last year’s situation, as described above, highlights key issues that commercial banks must continue to address in 2026. However, the difference this year is a potentially more challenging economic and business environment, which could make sustaining performance increasingly difficult. Consequently, KResearch expects the key challenges for the banking industry in 2026 to revolve around three core areas:
1) Diversifying revenue sources, particularly non-interest income, may be essential to offset the impact of net interest income, which is expected to remain under pressure in 2026;
2) Comprehensive cost management across all dimensions, including financial costs;
3) Managing asset quality, which may require monitoring the potential migration of performing loans into non-performing loans (NPLs) and the further deterioration of loans already showing repayment stress, as well as maintaining high NPL coverage ratios in line with potential risks that may arise during the year.
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