Overall, the report reflects a “steady growth” trajectory. Despite the compressed net interest margins facing the broader Chinese banking sector, ABC has managed to maintain positive growth in both revenue and net profit while improving its asset quality.
Here is a brief analytical breakdown of the key highlights:
Financial Performance & Efficiency
- Resilient Revenue Growth: The 1.87% year-on-year (YoY) increase in total revenue, paired with a stronger 4.30% growth in Q3 alone, suggests that the bank’s revenue generation accelerated in the second half of the year.
- Profitability: A net profit of 2,208.59 billion RMB (+3.03% YoY) indicates stable operations. However, the growth rate of net profit exceeding revenue growth often suggests effective cost control or a reduction in relative impairment charges.
- Cash Flow Strength: The significant growth in operating cash flow (+8.49%) to over 2 trillion RMB highlights robust liquidity and strong deposit-taking capabilities.
Asset Quality and Capital
- Improving Asset Quality: The decline in the Non-Performing Loan (NPL) ratio to 1.27% (down 0.03 percentage points) is a positive signal, especially given the macroeconomic headwinds.
- High Risk Buffer: A Provision Coverage Ratio of 295.08% is quite conservative and healthy, providing a significant “cushion” to absorb potential future credit losses.
- Capital Adequacy: With a total Capital Adequacy Ratio of 17.78%, the bank remains well above regulatory requirements, supporting its status as a Global Systemically Important Bank (G-SIB).
Comparative Summary Table
| Category | Value (2025 Q1-Q3 / Sept 30) | YoY Change / vs. Year-end 2024 |
| Operating Revenue | 5,507.74 Billion RMB | +1.87% |
| Net Profit (Attributable) | 220.86 Billion RMB | +3.03% |
| Total Assets | 48,135.43 Billion RMB | +11.33% |
| NPL Ratio | 1.27% | -0.03 ppts |
| Provision Coverage | 295.08% | (Strong Buffer) |
Here is the consolidated 2025 Q1-Q3 Income Statement for the Agricultural Bank of China.
Agricultural Bank of China Limited
Consolidated Income Statement (Condensed)
For the nine months ended September 30, 2025 (Expressed in RMB Million)
| Item | 2025 (Jan – Sept) | % of Revenue | YoY Change |
| Total Operating Income | 550,774 | 100.00% | +1.87% |
| 1. Net Interest Income | 427,308 | 77.58% | -2.40% |
| 2. Net Fee & Commission Income | 79,828 | 14.49% | +10.82% |
| 3. Other Non-Interest Income* | 43,638 | 7.92% | +41.50% |
| Total Operating Expenses | (174,669) | -31.71% | +3.84% |
| Credit Impairment Losses | (127,403) | -23.13% | -2.78% |
| Profit Before Tax | 249,292 | 45.26% | +3.31% |
| Income Tax Expense | (26,969) | -4.90% | +3.39% |
| Net Profit | 222,323 | 40.37% | +3.28% |
| Net Profit Attributable to Shareholders | 220,859 | 40.10% | +3.03% |
*Note: Other Non-Interest Income includes Investment Gains, Fair Value Changes, and Exchange Gains/Losses.
Financial Analysis & Commentary
1. Strategic Revenue Shift
The most notable trend is the structural rebalancing of revenue. While Net Interest Income (the bank’s bread and butter) contracted by 2.40%, the bank successfully defended its top line through Non-Interest Income.
- The “NIM” Squeeze: The decline in interest income reflects the ongoing pressure of lowering loan prime rates (LPR) in China.
- Fee Resurgence: The 10.82% growth in fee income is a standout metric, suggesting ABC is successfully growing its wealth management and transaction banking services.
2. Cost and Risk Management
ABC demonstrated disciplined management in a challenging macro environment:
- Efficiency: The Cost-to-Income ratio of 31.71% shows that for every 100 RMB earned, the bank spends roughly 32 RMB on operations. This remains highly competitive globally.
- Risk Release: A 2.78% reduction in credit impairment losses suggests that the bank’s asset quality is stabilizing, allowing them to provision less aggressively than in previous years, which directly bolstered the bottom line.
3. Profitability and Shareholder Value
- Net Margin: Maintaining a net profit margin above 40% is a sign of immense scale and pricing power.
- EPS Stability: With an EPS of 0.59 RMB, the bank remains a consistent “cash cow” for its major shareholders (Huijin and the Ministry of Finance).
Summary Conclusion
ABC’s 2025 Q3 performance proves its resilience. By leveraging its massive balance sheet to grow fee-based income and managing credit costs effectively, it has managed to deliver profit growth even as its core interest margins were under pressure.
The Balance Sheet analysis for the Agricultural Bank of China (ABC) as of September 30, 2025, reveals a bank in a state of rapid expansion, with total assets nearing the 48 trillion RMB milestone.
Financial Health & Structural Analysis
1. Aggressive Asset Expansion
The 11.33% YTD growth in total assets is remarkably high for a global systemically important bank.
- Credit Support: Loans and advances make up over 54% of the balance sheet. The 8.52% growth here indicates that despite a complex macro environment, ABC is aggressively deploying capital into the real economy.
- Liquidity Surge: The 59.07% jump in Cash and Balances at Central Banks is a strategic outlier. This suggests a massive buildup of liquidity reserves, possibly in anticipation of regulatory shifts or to ensure high stability amidst market volatility.
2. Shifting Liability Mix
While deposits remain the bedrock of the bank (66.62% of assets), we are seeing a shift in how the bank funds its growth:
- Deposit Lag: Customer deposits grew by only 5.82%, significantly trailing asset growth (11.33%).
- Institutional Funding: To bridge this gap, ABC turned to the interbank market. The 102.77% increase in “Due to Banks” and the 17.91% rise in Debt Securities Issued indicate that the bank is becoming more reliant on wholesale funding. While this allows for rapid scaling, it can increase sensitivity to interbank interest rate fluctuations compared to low-cost retail deposits.
3. Capital Adequacy & Leverage
The 2.52% growth in Equity is modest compared to the asset side. This implies an increase in financial leverage to support expansion. However, as noted in previous sections, the Capital Adequacy Ratio remains strong at 17.78%, well above the global regulatory buffers for G-SIBs.
Comparative Summary (YTD Change)
| Metric | Growth (%) | Strategic Implication |
| Total Assets | +11.33% | Rapid scale expansion; nearing 50 trillion RMB mark. |
| Loans | +8.52% | Steady credit deployment; core business remains healthy. |
| Deposits | +5.82% | Slower growth; highlights a “deposit-gap” being filled by wholesale funds. |
| Interbank Liabilities | +102.77% | Significant shift toward institutional funding sources. |
Comprehensive Summary: 2025 Q3 Performance
By combining the Income Statement and the Balance Sheet, the picture of ABC in 2025 is clear:
The bank is using its massive scale and increasing institutional leverage to offset the shrinking margins (NIM) in traditional lending. It is successfully pivoting toward a more diversified model where non-interest income and institutional funding play a larger role in maintaining a 3.03% net profit growth.
To address the compression of the Net Interest Margin (NIM) reflected in the 2025 Q3 report, we need to look at the “scissors gap” between falling asset yields and sticky liability costs.
Despite total assets growing by over 11%, Net Interest Income actually fell by 2.40%, confirming that the spread the bank earns on each dollar is tightening.
Why the Net Interest Margin (NIM) is Narrowing
1. Asset Side: The “Yield Squeeze”
- LPR Repricing: As a major state-owned bank, ABC is highly sensitive to the Loan Prime Rate (LPR). Multiple rounds of LPR cuts by the central bank mean that when existing loans are “repriced” (usually annually), the interest the bank receives drops immediately.
- Policy-Driven Lending: ABC has a mandate to support “Three Rural” (agriculture, rural areas, and farmers) and “Inclusive Finance.” These sectors often receive preferential, lower-than-market interest rates, which lowers the bank’s average Return on Interest-Earning Assets.
- High Liquidity Buffers: As seen in the balance sheet, Cash & Balances at Central Banks surged by 59.07%. While safe, these assets yield very low returns (reserves interest), dragging down the overall portfolio yield.
2. Liability Side: The “Cost Rigidity”
- Deposit “Time-Forming”: While the bank lowered deposit rates, customers reacted by moving money from low-interest “Demand Deposits” (current accounts) into “Time Deposits” (fixed-term) to lock in rates. This shift increases the bank’s Average Cost of Funds.
- Wholesale Funding Reliance: Because deposit growth (+5.82%) lagged far behind asset growth (+11.33%), ABC had to fund the gap using more expensive interbank market tools. As noted, Due to Banks skyrocketed by 102.77%, and Debt Securities Issued rose by 17.91%. These “wholesale” funds generally cost more than retail deposits.
The “Volume-for-Price” Strategy
To combat the narrowing margin, ABC is employing a two-pronged strategy:
- Scale Expansion: Since they earn less per loan, they are issuing more loans. The 8.52% YTD increase in loans is an attempt to keep total profit growing even as the margin per unit shrinks.
- Non-Interest Pivot: The bank is aggressively growing its “light-capital” businesses. The 20.03% surge in non-interest income (fees, commissions, and investment gains) is essentially the “lifesaver” that allowed ABC to post a 3.03% net profit growth despite the core margin struggle.
Summary Table: Margin Compression Factors
| Direction | Factor | Impact on NIM |
| Asset (Yield ↓) | LPR Cuts & Loan Repricing | Negative (Primary Driver) |
| Asset (Yield ↓) | Increase in low-yield liquidity reserves | Negative |
| Liability (Cost ↑) | Deposit “Time-Forming” (Shift to Fixed) | Negative |
| Liability (Cost ↑) | Increased reliance on Interbank/Debt funding | Negative |
| Mitigation | Scale expansion (Total Assets +11.33%) | Neutral (Protects Total Profit) |
Here is the consolidated 2025 Q1-Q3 Cash Flow Statement for the Agricultural Bank of China, followed by a summary of its strategic implications.
Agricultural Bank of China Limited
Consolidated Statement of Cash Flows (Condensed)
For the nine months ended September 30, 2025 (Expressed in RMB Million)
| Item | 2025 (Jan – Sept) | 2024 (Jan – Sept) | YoY Change |
| I. Net Cash from Operating Activities | 2,034,128 | 1,874,980 | +8.49% |
| Net Increase in Deposits | 2,076,418 | 1,928,567 | +7.67% |
| Net Increase in Loans | (2,093,891) | (2,070,044) | +1.15% |
| II. Net Cash used in Investing Activities | (1,208,002) | (1,771,297) | -31.80% |
| Cash Paid for Investments | (4,518,534) | (5,184,625) | -12.85% |
| III. Net Cash from Financing Activities | 254,114 | 166,316 | +52.79% |
| Proceeds from Issuing Bonds | 3,450,107 | 2,920,323 | +18.14% |
| IV. Effect of Exchange Rate Changes | 6,528 | (2,692) | N/A |
| V. Net Increase in Cash & Equivalents | 1,080,240 | 269,999 | +300.09% |
| VI. Ending Cash & Equivalents Balance | 2,933,380 | 2,780,032 | +5.52% |
Key Financial Insights
1. Exceptional Liquidity Accumulation
The most striking figure is the 300.09% surge in Net Cash Increase. While the bank’s net profit grew modestly ($3.03\%$), its cash position exploded. This suggests ABC is prioritizing liquidity over immediate yield, likely as a defensive play against macroeconomic uncertainty or in preparation for large-scale policy-driven lending in the coming quarters.
2. The Balance of “Lending vs. Funding”
ABC’s core engine remains perfectly balanced:
- The cash inflow from New Deposits (2.076 Trillion) is almost identical to the cash outflow for New Loans (2.093 Trillion).
- This “1:1” ratio in cash terms indicates that ABC is not over-leveraging its balance sheet to grow its loan book; it is fueling its credit expansion directly with retail and corporate deposits.
3. Strategic “Market” Funding
The 52.79% increase in Financing Cash Flow shows that ABC is not relying solely on deposits. By issuing 3.45 Trillion RMB in bonds, the bank is tapping the capital markets to lock in longer-term funding. This is a smart move to mitigate the “maturity mismatch” (using short-term deposits to fund long-term loans) that often plagues large banks during interest rate shifts.
Analytical Conclusion
ABC’s 2025 cash flow profile depicts a “Fortress Balance Sheet.” By slowing down its investment pace (outflow narrowed by 31.8%) and ramping up bond issuance, the bank has built a 2.93 Trillion RMB cash pile. This provides ABC with massive flexibility to either absorb potential credit shocks or aggressively pivot back into the market when interest rates stabilize.
In the 2025 Q3 Report of the Agricultural Bank of China (ABC), the “Net Increase in Borrowings from the Central Bank” reached 239.7 billion RMB, a massive spike compared to only 7.4 billion RMB in the same period of 2024.
Based on financial analysis and the 2025/2026 economic environment in China, here are the primary reasons for this increase:
1. Utilization of “Structural Monetary Policy Tools”
This is the most significant driver. The People’s Bank of China (PBOC) has moved toward a “Moderately Supportive” stance, utilizing targeted re-lending rather than just broad-based rate cuts.
- Targeted Re-lending: ABC is a primary channel for the PBOC’s specialized lending programs. These programs provide low-cost funds specifically for Technology Innovation, Green Development, and “Three Rural” (Agriculture, Rural areas, and Farmers) sectors.
- Expansion of Quotas: In 2025, the PBOC significantly expanded re-lending quotas (e.g., the quota for tech innovation was increased toward 1.2 trillion RMB). As ABC ramps up loans in these high-priority sectors, it “borrows” the funds from the central bank to facilitate these transactions.
2. Strategic Cost Optimization (NIM Protection)
As we discussed earlier, ABC’s Net Interest Margin (NIM) is under pressure.
- Lower Funding Costs: Borrowing directly from the central bank via re-lending facilities or the Medium-term Lending Facility (MLF) is often cheaper than attracting market-rate deposits or issuing corporate bonds.
- Stabilizing Margins: By increasing the portion of “central bank debt” in its liability mix, ABC can lower its overall Weighted Average Cost of Capital (WACC), helping to protect its 3.03% net profit growth despite falling loan yields.
3. Managing the “Deposit-Loan Gap”
The 2025 Q3 Balance Sheet showed a mismatch: Total Assets grew by 11.33%, but Deposits only grew by 5.82%.
- Liquidity Injection: When customer deposits don’t grow fast enough to fund the bank’s aggressive credit expansion, the bank must find alternative liquidity.
- Source of Last Resort: The central bank acts as the ultimate liquidity provider. ABC used these borrowings to ensure it had enough “base money” to meet its reserve requirements while continuing to issue over 2 trillion RMB in new loans during the period.
4. Support for the Real Estate & “New Quality” Industries
Throughout 2025, the central bank encouraged major banks to provide liquidity to assist in refinancing local government debt and supporting the property sector’s recovery. Borrowings from the central bank often represent the “funding fuel” provided by the state to allow big banks like ABC to absorb these systemic responsibilities without stressing their own private liquidity.
Summary Table: Borrowing from the Central Bank
| Reason | Mechanism | Benefit to ABC |
| Policy Mandate | Structural Re-lending (Tech/Green/Rural) | Lower interest expense on specific loan types. |
| Liquidity Gap | Filling the “Deposit-Loan” growth mismatch | Allows continued asset expansion (Scale). |
| Profit Protection | Accessing cheap PBOC funds vs. market rates | Offsets Net Interest Margin (NIM) compression. |
| Counter-cyclical | Open Market Operations (OMO/MLF) | Ensures high liquidity reserves (Cash +59%). |