State-owned capital injects 7 billion yuan, Hubei Bank makes full push toward goals

Listing｜Damo Finance

In Hubei, a hotbed of the economy with a total gross domestic product surpassing 6 trillion yuan and ranking among the top in the country for growth rate, a long-standing awkward reality persists — as a central financial hub, Hubei has yet to have a single local-listed bank.

Hubei’s city commercial banks form a clear “one province, one city, dual leaders” pattern, with the provincial-backed Hubei Bank and the city-core Hankou Bank standing side by side. These are the only two core contenders for Hubei’s push to list on the A-share market.

Hubei Bank was approved to establish in 2011, nearly 11 years later than Hankou Bank, and has consistently lagged behind Hankou Bank in asset size. By 2025, Hubei Bank surpassed Hankou Bank for the first time. As of the end of Q3, Hubei Bank’s assets totaled 620.4 billion yuan, while Hankou Bank’s were 588.4 billion yuan.

For a long time, both banks have been stuck in a marathon of IPO delays. Hankou Bank signed an IPO guidance agreement with Haitong Securities as early as 2010, and has disclosed 64 guidance reports to date. Although Hubei Bank started later, it submitted an application to the Shanghai Stock Exchange in November 2022, and is currently under review under the registration system, with the status “Accepted.”

In the past two years, these two banks in Hubei have successively completed large-scale capital injections, injecting new momentum into this long marathon of going public.

Recently, Hubei Bank’s official website disclosed a targeted issuance report showing that the bank completed an issuance of 1.8 billion shares, raising a total of 7.614 billion yuan, making it one of the larger bank capital increases this year. In March last year, Hankou Bank also completed a private placement of 874 million shares, raising 4.587 billion yuan.

These two “large-scale capital-boost plans” not only eased the capital pressure on both banks but also brought profound changes to their shareholding and governance structures, clearing obstacles for their IPO ambitions.

However, in the context of a three-year “frozen” IPO market for A-shares banks, who will be the first to cross the finish line remains uncertain.

Hubei Bank’s Large-Scale Capital Increase

As the only provincial-level city commercial bank in Hubei, Hubei Bank has borne the strategic mission of serving as a provincial financial platform since its founding. Leveraging its resource advantages across the province, it has become a core pillar of the local financial landscape.

Behind this “big move” in Hubei Bank’s targeted share issuance is the bank’s ongoing pressure on its capital adequacy ratio in recent years. Data shows that from 2022 to 2024, the bank’s core Tier 1 capital adequacy ratio declined from 9.37% to 7.94%. By the end of Q3 2025, it further dropped to 7.74%, approaching the regulatory red line of 7.5%.

The targeted issuance report indicates that by the end of 2025, this capital increase will raise the bank’s core Tier 1 capital adequacy ratio from 7.94% at the end of 2024 to 8.96%, an increase of 1.02 percentage points. This capital injection will provide some relief to Hubei Bank’s capital adequacy.

This capital increase is arguably the most talked-about bank financing event since the start of 2026. The issuance of 1.8 billion shares and raising 7.614 billion yuan not only improved the bank’s core Tier 1 capital adequacy ratio but also thoroughly restructured its shareholding pattern to be more “Hubei-centric.”

According to the issuance report, among the 35 new legal entity shareholders, except for Hubei Yulong Water Resources and Hydropower Engineering Co., Ltd., which is a provincial state-owned enterprise, the other 34 shareholders are local enterprises from 15 cities and prefectures within Hubei Province. Over 96% of the newly issued shares were subscribed by state-owned enterprises from Hubei Province (cities and counties), forming a “province-wide support” pattern, which is rare in the history of city commercial banks.

Industry analysts suggest that this issuance far exceeds ordinary financial investment, with most of the new funds coming from the local state-owned asset system, building a province-wide shareholder network.

This deep binding with state assets clearly signals strategic intent. It’s not only to support the IPO but also to pave the way for the 2027 “trillion-yuan asset scale” goal. Hubei Bank Chairman Zhao Hongbing has repeatedly expressed this vision publicly. Based on the 2025 year-end figure of 621.4 billion yuan, maintaining an annual growth rate of about 20% over the next two years is necessary.

Born in 1968, Zhao Hongbing hails from the Hubei Provincial Finance Department and was nominated as chairman of Hubei Bank in April last year. The current President, Liu Zhanming, born in 1972, has extensive experience in rural credit systems. The integration of finance and rural credit aligns with the bank’s dual strategic positioning of “serving the provincial economy” and “penetrating county markets.”

However, capital replenishment only addresses Hubei Bank’s current capital difficulties. The bank still faces many issues. As of the end of Q3 2025, the non-performing loan (NPL) ratio was 1.85%, down from 1.95% at the end of 2024, but the NPL balance increased to 6.499 billion yuan, with absolute size still expanding.

More concerning is that the bank’s net profit growth rate declined from 22.74% in 2022 to 7.72% in 2024. Although it rebounded to 15.43% in the first three quarters of 2025, whether this upward trend can continue remains to be seen.

In an industry environment characterized by narrowing net interest margins, Hubei Bank needs to demonstrate not only its ability to be backed by state assets but also how to convert its capital advantage into sustainable internal growth. After all, reaching a trillion-yuan scale requires roughly 120 billion yuan in annual asset expansion, posing significant challenges to risk pricing and capital management.

Hankou Bank’s Record for Longest Guidance Period

If Hubei Bank’s IPO is a sprint to accelerate, Hankou Bank’s path to listing resembles a marathon that has lasted for years. Currently, its IPO guidance report has been updated to the 64th session, setting the longest record among Chinese banks’ guidance periods.

Founded in 1997, Hankou Bank signed an IPO guidance agreement with Haitong Securities as early as 2010. At that time, the market was optimistic about the involvement of Lenovo Holdings as a strategic investor. But after 15 years, other city commercial banks that started the process have already gone public, while Hankou Bank remains in guidance. The guidance report in early 2026 still mentions the old issue: “Limited channels for capital supplementation.”

Last March, Hankou Bank completed a private placement of 4.586 billion yuan, finally giving this “long-waiting IPO candidate” a new chapter.

The most notable aspect of this capital increase is that Wuhan Financial Holdings Group, with an 11.62% stake, surpassed Lenovo Holdings to become the largest shareholder. This is the first time Lenovo has fallen to second place since acquiring Hankou Bank in 2010.

This reshaping of the shareholder structure is interpreted by the market as “a deeper imprint of Wuhan’s influence on Hankou Bank.” Wuhan Financial Holdings, as a city-owned capital investment platform, becoming the largest shareholder signifies a closer tie between the bank and major projects in Wuhan. It also marks a strategic shift from market-driven capital to state-owned capital dominance.

In terms of management, since Chairman Liu Bo and former Chairman Chen Xinmin were dismissed in 2023, Liu has served as acting chairman for nearly three years. In March, the Wuhan Municipal Organization Department announced a pre-appointment public notice, indicating that Mao Feng, a member of the bank’s Party Committee and vice president, is expected to succeed as the official president. Market expectations are high that he will end the unusual dual role of chairman and president.

Hankou Bank’s capital adequacy ratio has also been volatile. At the end of 2023, its core Tier 1 ratio briefly dropped to 7.61%, approaching the regulatory red line. After a temporary increase to 9.3% through capital injection, it fell back to 8.54% by Q3 2025. This cycle of capital replenishment and consumption reflects the bank’s difficult balancing act between business expansion and capital constraints.

In 2024, Hankou Bank’s net profit attributable to shareholders was only 1.055 billion yuan, a sharp decline of 25.3%. The significant drop in profitability makes internal capital replenishment nearly impossible. The latest guidance report also mentions ongoing issues of capital depletion and limited channels for replenishment, indicating that the guidance work still needs further progress.