The interim reporting season for Hong Kong-listed city commercial banks has drawn to a close. A comprehensive review of the disclosures reveals that during the first half of 2026, the vast majority of these institutions expanded their total assets compared to the end of 2025, with a collective increase of 516.194 billion yuan.

Turning to operational metrics, 12 of the 15 banks reported year-on-year growth in operating income, with Yibin Bank and Luzhou Bank posting gains exceeding 15%. Meanwhile, 13 banks saw their net profits rise from the same period last year, with six institutions, including Weihai Bank, Bank of Qingdao, and Harbin Bank, achieving growth rates above 10%. Conversely, 12 banks experienced a decline in fee-based income.

Despite Harbin Bank's robust headline results, which included a 4.53% increase in operating revenue and an 11.29% jump in net profit, its net interest margin (NIM) came under significant pressure during the period. The bank's NIM fell to 0.98%, making it the only institution among the 15 to have its margin drop below the 1% threshold.

Fee-based income struggles across the sector

Data compiled from interim reports and financial information provider Tonghuashun iFinD shows that as of the end of June 2026, the combined assets of the 15 banks stood at approximately 12.23 trillion yuan, up roughly 516.194 billion yuan from the close of 2025. Huishang Bank and Chongqing Bank led the pack with asset totals of 2.49 trillion yuan and 1.11 trillion yuan, respectively, followed by Zhongyuan Bank at 1.50 trillion yuan, Chongqing Bank at 1.11 trillion yuan, and Harbin Bank at 1.03 trillion yuan.

In terms of growth, Chongqing Bank and Huishang Bank saw their assets expand by 7.27% and 7.06%, respectively, while five other banks, including Weihai Bank, Yibin Bank, Bank of Zhengzhou, Zhongyuan Bank, and Gansu Bank, all recorded growth rates exceeding 5%.

For the first half of 2026, the 15 banks generated combined operating income of approximately 107.362 billion yuan and net profits of roughly 31.518 billion yuan, with 11 banks achieving simultaneous growth in both revenue and profit. However, revenue growth trajectories varied widely across the group. According to Tonghuashun iFinD data, 12 banks reported year-on-year revenue increases, and 13 saw net profit gains. Yibin Bank, Luzhou Bank, and Weihai Bank led revenue growth with increases of 17.61%, 15.74%, and 13.73%, respectively.

Weihai Bank posted the fastest profit expansion, with net profit surging 24.59%. Five other institutions, including Bank of Qingdao, Harbin Bank, and Yibin Bank, recorded profit growth exceeding 10%. It is worth noting that Bank of Tianjin was the only bank to report declines in both operating income and net profit, which fell by 3.72% and 6.64%, respectively.

Net interest margin pressure for Hong Kong-listed city commercial banks eased somewhat in the first half. Overall, most of the 15 banks maintained NIMs between 1% and 2%, with nine reporting improvements compared to the same period last year. Luzhou Bank stood out with a NIM of 2.64%, the only one to remain above 2%. In contrast, Harbin Bank saw its NIM narrow by 12 basis points year-on-year to 0.98%, becoming the only bank with a margin below the 1% mark.

Fee-based income remained a weak spot for many institutions. Only Bank of Qingdao, Bank of Jiujiang, and Harbin Bank reported positive growth in net fee and commission income, with increases of 32.66%, 13.37%, and 7.35%, respectively. The remaining 12 banks all experienced varying degrees of decline.

An industry analyst at consulting firm Botong noted that the downward trend in fee and commission income for city commercial banks is largely attributable to persistent weakness in traditional intermediary businesses such as wealth distribution and payment settlement. The reasons include subdued retail investment appetite, which has shrunk wealth management and insurance distribution fees, and regulatory guidance prompting some banks to voluntarily reduce high-risk agency businesses. Additionally, differences in business mix have created clear divergence within the sector, with only a few banks achieving positive fee income growth through specialized services, such as card-related businesses or expanded settlement services.

Harbin Bank's margin slips below 1%

According to Harbin Bank's 2026 interim report, its total assets increased slightly from 1,019.340 billion yuan at the end of 2025 to 1,025.865 billion yuan by mid-2026, an uptick of 0.64%. The bank achieved growth in both revenue and profit during the period. Operating income reached 7.720 billion yuan, up 4.52% from 7.386 billion yuan in the prior year, while net profit attributable to shareholders rose 12.90% to 1.033 billion yuan from 915 million yuan.

The bank's fee-based business performed relatively well, with fee and commission income climbing 34 million yuan to 387 million yuan. Net fee and commission income rose 7.35% to 290 million yuan, one of the few positive readings among the 15 banks. The bank attributed this increase to higher consulting and advisory fee income.

However, margin pressure remained a key concern. Harbin Bank's NIM stood at 0.98% at the end of June, down 12 basis points year-on-year. A longer-term view shows a steady decline in its NIM for the first half of each year from 2021 through 2025, at 1.83%, 1.82%, 1.36%, 1.36%, and 1.10%, respectively.

Comparing with industry data, the gap is stark. According to the National Financial Regulatory Administration, the average NIM for commercial banks in the second quarter of 2026 was 1.41%, up 1 basis point from the first quarter and marking the first sequential quarterly increase since 2022. By bank type, large commercial banks recorded 1.31%, city commercial banks 1.40%, joint-stock banks 1.54%, and rural commercial banks 1.59%. Harbin Bank's 0.98% margin was significantly lower than the 1.40% average for city commercial banks.

In its interim report, Harbin Bank explained that the decline in net interest margin and net interest spread was due to the maturity of existing higher-priced assets, intense competition in the real economy credit market, and falling interest rates, which resulted in a larger year-on-year decline in the average yield on interest-earning assets compared to the drop in the average cost of interest-bearing liabilities.