Chinese banks saw net interest margins compress to 1.52% in 2024, marking five consecutive years of decline. While competitors are bleeding money, China Merchants Bank (CMB) bucked the trend and expanded assets under management by 12% to Rmb15 trillion ($2.1 trillion).
Its retail customer base grew 6.6% to 210 million. Net profit rose 1.22%. Total deposits jumped 11.54% to Rmb9.1 trillion. Known as the “retail king”, CMB’s retail division continues to generate over half of the bank’s operating income and profit.
The secret lies in understanding what Chinese consumers really want: not just a place to park money, but tools to navigate an increasingly complex financial landscape. When deposit rates collapsed across the industry in 2024, CMB responded not with unsustainable promotional rates but with intelligence. Its CMB TREE Asset Allocation Service System democratised wealth management, using AI to deliver personalised investment advice that was once the preserve of private banking clients. Coverage expanded by 13.84% as middle-class savers sought guidance beyond traditional deposits.
This focus on solving real problems extends to daily life. CMB’s Dining Voucher programme, launched in 2024, transforms routine spending into savings opportunities. By connecting the bank’s small business clients – local restaurants and shops – directly with consumers through targeted offers, CMB created value on both sides of the transaction. Similar partnerships with ride-hailing services and other daily necessities turned the bank into something more useful than a financial institution: a lifestyle companion.
Twenty years ago, CMB bet on retail banking while peers chased corporate loans. Today, it has built something harder to replicate
The execution required serious technological muscle. CMB’s proprietary AI model, with tens of billions of parameters, powers everything from investment recommendations to the chatbots that resolve 90% of customer service enquiries without human intervention. The bank’s mobile applications, used by 123 million people monthly, handle everything from wealth management to restaurant bookings.
CMB speeds up the simple tasks so humans can handle the complex problems. When mortgage holders struggled with rate adjustments in 2024, the bank proactively cut rates and simplified refinancing. The bank spends heavily on technology – 4.37% of revenue – but deploys it to enhance human connection, not replace it.
The economics validate the approach. Fee income from wealth management and lifestyle services reached 37.33% of total revenue, well above industry norms. While competitors may rely on shrinking interest margins, CMB has built multiple revenue streams that grow with customer engagement rather than loan volumes.
This resilience matters, as Chinese banking enters uncharted territory. The old model – high margins, rising property values, expanding credit – is dead. Twenty years ago, CMB bet on retail banking while peers chased corporate loans. Today, it has built something harder to replicate: 210 million customers who choose to bank there not because it’s cheapest, but because it makes their financial lives work better.
