by ZENG Lingjun

China’s top state-owned lenders are continuing to trim their vast branch networks as digital banking becomes the norm. Meanwhile, joint-stock banks—with far smaller physical footprints—are largely holding steady, focusing on targeted upgrades or structural adjustments.

Data from the China Banking Association highlights the industry-wide shift: between 2020 and 2023, over 90% of banking transactions moved to electronic channels, peaking near 97% in 2022. As foot traffic continues to decline—particularly among younger customers—traditional bank branches are being reimagined. Lenders are transforming physical locations from transactional counters into service and experience centres, a sign of banking’s ongoing evolution in the digital era.

Based on its review of 2024 annual reports, Jiemian News found that China’s six largest state-owned banks closed more than 300 branches over the year. Postal Savings Bank of China and ICBC cut 140 and 130 outlets respectively. China Construction Bank and Bank of China also made modest trims, while Agricultural Bank of China stood out as the only one to expand, adding 34 new branches to reach a total of 22,877. Given the scale of their networks—nearly 40,000 for Postal Savings Bank and over 15,000 for ICBC—the reductions are incremental rather than transformative.

Branch closures have been driven by the high costs and diminishing returns of physical operations. One senior provincial executive at a state-owned bank told Jiemian News that for community-level branches operating at a loss, the average annual shortfall exceeds 2 million yuan, driven by rent, labour and maintenance costs. Many such outlets have operated at a loss for years.

Despite the overall decline, some state lenders are reallocating branch resources rather than retreating entirely. ICBC opened 104 new outlets in rural counties, lifting its county-level coverage rate to 87.4%. Postal Savings Bank added new branches in Xinjiang, Xizang and other designated poverty-alleviation zones, while consolidating underperforming locations in dense urban areas.

Lou Feipeng, a researcher at Postal Savings Bank, said the trend reflects a broader shift in strategy. Large state-owned banks, with their extensive geographic reach, are now reallocating resources amid the rapid growth of digital finance. In pursuit of greater efficiency and improved service delivery, they are scaling back low-performing branches and investing more in technology.

Joint-stock banks, by contrast, typically operate only hundreds or a few thousand branches. This makes even small numerical changes proportionally significant. Of the eight that have released annual reports, five—including China Merchants Bank and CITIC Bank—slightly increased branch numbers. Others, like Ping An Bank and China Minsheng Bank, reported modest reductions.

A strategy analyst at a southern China joint-stock bank said the sector has largely moved from rapid geographic expansion to targeted refinement. The emphasis now is on improving service quality, adjusting to regional demands, and adapting to customers’ increasing preference for digital channels.

CITIC Bank is focusing its development efforts on top-tier cities such as Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou and Nanjing. China Merchants Bank, meanwhile, relocated and upgraded more than 100 of its existing branches in 2024.