All six major state-owned banks have now concluded their 2025 annual general meetings of shareholders.

As the second state-owned megabank to surpass total assets of 50 trillion yuan, Agricultural Bank of China's meeting conveyed a series of significant messages.

Chairman Gu Shu reiterated both the risks and potential of AI, clarifying that "AI replaces a part of human tasks." He also revealed that over the past three years, the bank has recruited a total of 84,000 university graduates.

Gu Shu emphasized that this substantial frontline workforce has become a distinctive advantage for Agricultural Bank of China in credit management.

In another key point, President Wang Zhiheng provided an optimistic outlook on stabilizing net interest margins.

He noted that the bank's net interest margin only declined by 2 basis points in the first quarter, while its net interest income grew by 7.6% year-on-year.

Wang added that since the second quarter, the net interest margin has continued to show positive momentum and is projected to remain generally stable for the full year.

Furthermore, as a larger institution carries greater responsibility for asset quality management, the bank addressed shareholder concerns by highlighting three areas where it leads its peers.

It reported the largest reduction in its non-performing loan ratio, the best overdue loan ratio, and the lowest year-on-year growth in newly generated non-performing loans among comparable peers.

Agricultural Bank of China is also the only state-owned megabank with loan loss provisions exceeding one trillion yuan and the only one with a negative gap between its overdue and non-performing loan ratios, indicating extremely stringent asset quality recognition standards.

Strategic Human Capital Investment

Just a week before the shareholder meeting, Chairman Gu Shu had discussed AI risks at the Lujiazui Forum.

At the AGM, he addressed a related but distinct question: with AI's rise, what happens to the bank's workforce?

Regarding AI risks, Gu Shu stated that the primary challenges in applying large financial models include their "black-box" nature, model hallucinations, and the uncertainties arising from autonomous model thinking and decision-making.

He explained that the industry's goal is not to eliminate these risks entirely, but to maximize the utility of large models while acknowledging their limitations and working to control associated risks.

On whether AI will replace bank employees, Gu Shu offered a direct response, stating that applying AI to empower business does not mean it can replace people; it replaces a portion of human work.

He elaborated that the purpose of AI application is to free up human resources for tasks that AI currently cannot perform, such as due diligence and post-loan monitoring visits.

This perspective gains weight when viewed alongside the bank's recent hiring data.

Gu Shu disclosed that the past three years represent the bank's largest recruitment period, with a total of 84,000 graduates hired from 2023 to 2025.

This hiring volume, both in total and annually, leads all financial institutions.

The bank also recruited 1,422 military veterans over this period, the highest number among financial institutions.

This strategy of leveraging AI while simultaneously conducting large-scale recruitment allows the bank to reallocate human capital to the "last mile" areas that AI finds difficult to reach.

In fact, this ample frontline workforce has become a unique strength for the bank's credit management.

Quality control in credit, especially for inclusive and retail loans, relies heavily on field investigations by relationship managers.

For its inclusive retail risk control system, the bank employs a hybrid online-offline approach, leveraging its extensive branch network, wide coverage, and strong team to conduct thorough offline investigations.

It emphasizes on-site supervision and accountability to avoid over-reliance on intermediaries.

This integrated strategy is key to the sustained effectiveness of the bank's inclusive finance risk controls.

Simultaneously, bolstered by this "strong team," 56% of the bank's branches are located in county towns and townships, making it the only bank with full county-level coverage.

In advancing rural revitalization and new urbanization, this unparalleled branch network is becoming an irreplicable competitive moat for the bank.

Confidence in Net Interest Margin Stability

If AI represents a question of the future, net interest margin is a pressing current concern.

By the end of 2025, the bank's net interest margin stood at 1.28%.

A core question at the meeting was whether this level could be maintained amid broader industry pressures.

President Wang Zhiheng first addressed this with data, stating that as of the end of Q1 2026, the net interest margin was 1.26%, a mere 2 basis point drop from year-end 2025, while net interest income grew 7.6% year-on-year.

He added that over the past two years, the bank's cumulative net interest margin decline of 32 basis points was the smallest among peers.

Wang further revealed that since Q2, the net interest margin has continued its positive recovery trend and is expected to remain generally stable for the full year.

He attributed this to the ongoing benefits from the repricing of maturing time deposits and the sustained strong performance of asset-side businesses like entity loans and investments.

He expressed confidence in the bank's ample room and potential for net interest margin improvement.

In essence, this stems from the two-way optimization of its liability and asset structure, with funding costs decreasing and asset yields improving.

On the deposit side, the largest volume of maturing three-year time deposits saw the highest reduction in posted rates, up to 135 basis points.

On the loan side, the interest rate on new loans issued in Q1 increased compared to the previous year, with rates for personal mortgages and consumer loans showing signs of stabilization.

Revenue data supports this assessment. Since 2020, the bank's net profit growth has led comparable peers for six consecutive years.

In 2025, operating income reached 725.3 billion yuan, up 2.1% year-on-year, while net profit was 292 billion yuan, up 3.3%.

Operating income has now grown positively for two straight years, recovering first among peers to reach a record high.

In Q1 of this year, it achieved double-digit growth on this already high base.

Chairman Gu Shu attributed the sustained positive performance to the fundamentally robust Chinese economy and the bank's key focus on high-quality development.

He highlighted the organic integration of the bank's unique cross-urban-rural strengths with broader socio-economic development.

Asset Quality Leadership and Outlook

As the second state-owned megabank to surpass 50 trillion yuan in assets, its asset quality was a major focus.

Shareholders inquired about the successful practices behind its strong asset quality performance over the past five years and how it plans to maintain this amid current industry headwinds.

Chairman Gu Shu presented several key metrics. As of the end of Q1 2026, the non-performing loan ratio was 1.25%.

After a cumulative 3 basis point reduction in 2025, it fell another 2 basis points in Q1, representing the largest decline among comparable peers.

The overdue loan ratio stood at 1.248%, the best level among peers, making it the only large commercial bank to see this ratio decline from the start of the year.

The year-on-year growth in newly generated non-performing loans was the lowest among peers, with the non-performing loan formation rate remaining below 1%.

A particularly notable detail is the "overdue-to-non-performing loan gap." Agricultural Bank of China is the only state-owned megabank with a negative figure for this indicator.

An overdue rate lower than the NPL rate signifies extremely strict asset quality recognition standards and more prudent bad debt confirmation.

Regarding provisions, the loan loss provision balance reached 1,039.7 billion yuan, an increase of 34.9 billion yuan, with a provision coverage ratio of 292.55%.

It is the only bank with a provision balance exceeding one trillion yuan.

On the core strategy for maintaining asset quality, Chairman Gu Shu outlined three pillars: first, improving forward-looking credit risk control mechanisms with detailed industry research and policy guidance to steer credit allocation.

Second, persisting with the integrated online-offline approach, leveraging the extensive branch network and strong team to build a distinctive inclusive retail risk prevention system with genuine offline investigations and robust supervision.

Third, empowering risk control with technology, a key transformational path for enhancing efficiency and optimizing risk management models.

Looking ahead, Gu Shu provided a clear forecast: credit asset quality is expected to remain favorable in Q2, with stable NPL and formation rates.

The negative overdue-to-NPL gap is projected to persist, and the provision coverage ratio is expected to remain stable.

An institution with over 50 trillion yuan in assets is adopting a cycle-traversing mindset to balance volume, pricing, risk, and efficiency, awaiting the cyclical rewards through pragmatic action.