China Minsheng Banking Corp., Ltd. has deliberately stepped away from its previous model of unchecked expansion. Throughout the first half of 2026, the bank's central theme has been "burden reduction"—encompassing balance sheet shrinkage, disposal of legacy risks, and streamlining of its branch network and workforce, marking a top-down structural overhaul.

The first pillar of this strategy involves shrinking the balance sheet, sacrificing short-term scale growth. As of mid-2026, China Minsheng Banking Corp., Ltd.'s total assets stood at RMB 7.79 trillion, a decrease of RMB 38.036 billion, or 0.49%, from the end of the previous year. The most significant reduction came from deposits and placements with banks and other financial institutions, alongside financial assets purchased under resale agreements, which together fell by RMB 119.328 billion from the end of 2024 to RMB 289.424 billion. Notably, the bank's total asset growth had already been decelerating since 2023, with increases of just 1.82% in 2024 and 0.23% in 2025.

Secondly, the bank has intensified its efforts to dispose of non-performing assets (NPAs) and shed risky exposures. China Minsheng Banking Corp., Ltd. has adopted a multi-pronged approach to optimize NPA resolution. In the first half of 2026, the bank collectively collected and disposed of RMB 38.986 billion in bad assets. This effort contributed to a decline in its NPL ratio. By the end of June 2026, total non-performing loans were RMB 66.323 billion, an increase of RMB 169 million from the year-end, but the NPL ratio improved to 1.47%, down 0.02 percentage points. The provision coverage ratio also rose to 142.19%, up 0.15 percentage points from the end of 2025. Despite this progress, the bank's NPL ratio remains relatively high compared to its peers.

To proactively hedge against potential future risks, the bank has also increased its provision charges. During January to June 2026, credit impairment losses amounted to RMB 31.457 billion, a year-on-year increase of RMB 5.418 billion, or 20.81%.

The third pillar is strict control over expenses, alongside optimizing its branch network and staff. In the first half of 2026, operating and administrative expenses were RMB 20.490 billion, a decrease of 0.81% year-on-year. Employee compensation (including directors' remuneration) reached RMB 12.597 billion, up 1.35% year-on-year. However, compensation for key management personnel declined. For the six-month period ended June 30, 2026, their pre-tax remuneration (including salaries and short-term benefits) totaled RMB 14 million, a reduction of RMB 5 million compared to the same period last year.

Meanwhile, the number of branch outlets and employees has shrunk. As of the end of June 2026, China Minsheng Banking Corp., Ltd.'s sales network spanned 142 cities in mainland China, encompassing 148 branch-level institutions (including 41 tier-1 branches, excluding Hong Kong and London branches, and 107 tier-2 branches) and 2,376 sub-branch outlets. This represents a net decrease of 13 sub-branch outlets compared to the end of last year. The bank employed 60,394 people as of end-June 2026, with 58,050 in the parent bank and 2,344 in subsidiaries. The parent bank had 6,060 staff in management roles and 51,990 in professional roles. Compared to the year-end, the total workforce decreased by 1,264, with the parent bank seeing a reduction of 932 employees. Notably, management roles increased by 8, while professional roles decreased by 924.

These intensive cost-cutting and risk-disposal efforts have caused short-term transitional pain, including rising revenue but falling profits. However, in the long run, this is a necessary path to clear historical risks and optimize the bank's business structure. In the first half of 2026, the bank generated operating income of RMB 75.166 billion, up 3.84% year-on-year, but net profit attributable to shareholders fell 8.62% to RMB 19.537 billion, a classic case of increasing revenue without increasing profit.

Currently, pressures from the real estate sector and corporate non-performing loans persist, and retail credit risks are on the rise, with risk exposure still impacting operational quality. As of the end of June 2026, corporate deposits stood at RMB 2,939.102 billion, up 2.26% from the year-end, while retail loans (including credit card overdrafts) totaled RMB 1,590.572 billion, down 4.24%. During the same period, total corporate non-performing loans (including bill discounts) were RMB 34.098 billion, an increase of RMB 97 million, with an NPL ratio of 1.17%, down 0.07 percentage points. Personal non-performing loans totaled RMB 32.225 billion, an increase of RMB 72 million, with an NPL ratio of 2.01%, up 0.09 percentage points from the end of the previous year.

The bank's corporate NPLs are primarily concentrated in real estate, wholesale and retail, and manufacturing. The combined NPLs in these three sectors reached RMB 23.941 billion, accounting for 70.21% of total corporate NPLs. Within this, real estate NPLs amounted to RMB 10.621 billion, a decrease of RMB 1.115 billion from the year-end, with an NPL ratio of 3.35%, down 0.26 percentage points.