Western Region's First Trillion-Yuan City Commercial Bank Chengdu Bank "Replenishes Capital," Large Retail Transformation Slows, Retail Loan Ratio Continues to Decline

Western China’s first trillion-level city commercial bank, Chengdu Bank, recently announced that its application to change its registered capital has been approved by the Sichuan Regulatory Bureau of the China Banking and Insurance Regulatory Commission. The registered capital has increased from 3.736 billion RMB to 4.238 billion RMB, a 13.46% increase.

Previously, Chengdu Bank’s convertible bonds were redeemed early and delisted on February 6, 2025. At that time, the total shares increased to 4.238 billion shares.

1. “Chengyin Convertible Bond” completes capital replenishment ==============

In March 2022, Chengdu Bank issued publicly tradable convertible bonds (“Chengyin Convertible Bonds”) with a total issuance of 8 billion RMB. The bonds have a 6-year term, with annual increasing coupon rates: 0.20% in the first year, 0.40% in the second, 0.70% in the third, 1.20% in the fourth, 1.70% in the fifth, and 2.00% in the sixth. At maturity, the issuer will redeem the bonds at 107% of face value (including the final interest). The initial conversion price was 14.53 RMB per share, with the conversion period from September 9, 2022, until the bonds mature.

On February 7, 2025, Chengdu Bank announced that, after 29 consecutive trading days from November 7, 2024, to December 17, 2024, during which the closing prices were not less than 130% of the current conversion price of 12.23 RMB per share, the redemption conditions were met. The total redemption amount was 4.941 million RMB (including interest), increasing the total share capital to 4.238 billion shares, with a very high conversion rate of 99.94%. By February 5, 2025, a total of 7.995 billion RMB of Chengyin Convertible Bonds had been converted.

On February 6, 2025, the Chengyin Convertible Bonds were officially delisted from the Shanghai Stock Exchange. Chengdu Bank thus became the first bank in central and western China to complete capital replenishment through forced redemption of convertible bonds, and also the first among banks that issued convertible bonds in the past five years to achieve forced redemption and conversion.

Dazhong International Industry Research reports that for listed banks, promoting the conversion of convertible bonds is an effective way to supplement core Tier 1 capital. In 2025, driven by stock prices, some listed banks’ convertible bonds triggered mandatory redemption conditions, accelerating the conversion process and directly strengthening core capital.

However, the report also emphasizes that capital replenishment is not a “once and for all” solution, and its positive effects face ongoing challenges. First, profit pressure has not been fundamentally alleviated. If banks fail to leverage capital advantages to successfully transform their business and improve profitability, then “capital injection” may only delay problems. Fundamental challenges such as net interest margin pressure and asset quality fluctuations still exist. Second, in the context of generally low valuations of small and medium-sized banks, pricing for capital increases and share issuance remains difficult.

2. Slow transformation of “large retail” strategy =============

Founded in December 1996, Chengdu Bank is Sichuan’s first listed bank, the first trillion-level city commercial bank in western China, a state-controlled regional joint-stock bank, and has introduced Malaysia’s Fubon Bank as an overseas strategic investor.

Chengdu Bank’s stock price reached a historical high in mid-2025, closing at 19.93 RMB per share on June 26. By mid-January this year, the stock price had generally declined. After the release of its third-quarter report on October 29, 2025, the stock experienced a sharp drop, closing at 17.07 RMB per share that day. As of January 19, 2026, the closing price was 15.46 RMB per share, showing a clear downward trend. Recently, the stock price has begun to recover, and at the time of reporting, it was 17.2 RMB per share.

The third-quarter 2025 report shows that the bank’s revenue for the first three quarters was 17.761 billion RMB, a year-on-year increase of 3.01%. However, quarterly revenue decreased by 2.92% to 5.491 billion RMB. The net profit attributable to the parent company for the first three quarters was 9.493 billion RMB, up 5.03% year-on-year, but net profit in the third quarter only increased slightly by 0.16% to 2.876 billion RMB.

In terms of income structure, interest income for the first three quarters of 2025 was 14.725 billion RMB, accounting for 82.9% of operating income, further increasing from 78.9% in the same period of 2024. Among “trillion-level city commercial banks,” this interest income proportion is relatively high. In comparison, Chongqing Bank and Changsha Bank’s interest income proportions in the third quarter of 2025 were approximately 77.7% and 73.3%, respectively.

Industry opinions generally believe that a high proportion of interest income reflects banks’ reliance on traditional deposit and loan business, with relatively simple operating models. Overdependence on interest income makes profits more vulnerable to interest rate fluctuations.

It is reported that Chengdu Bank’s net interest margin has been declining for several years, with figures of 2.13%, 2.04%, 1.81%, and 1.66% from 2021 to 2024, respectively. As of the end of the third quarter of 2025, it was 1.62%.

Additionally, Chengdu Bank’s business structure is predominantly corporate-oriented. Although the bank proposed a “large retail” strategy as early as 2018, its retail business remains weaker compared to other city commercial banks. As of the end of the third quarter of 2025, corporate loans accounted for 82.6% of total loans, while retail loans only made up 17.4%. Since 2023, the retail loan proportion has been steadily declining, with figures of 19.8%, 18.7%, and 17.2% at the end of 2023, 2024, and mid-2025, respectively. In contrast, Chongqing Bank and Changsha Bank, both trillion-level city commercial banks, had retail loan proportions of 19.9% and 31.9% at mid-2025.

As of the end of the third quarter of 2025, Chengdu Bank’s total assets were 1.385 trillion RMB, a 10.81% increase from the end of 2024. Its core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio, and capital adequacy ratio were 8.77%, 10.52%, and 14.39%, respectively, all above industry averages.

3. Multiple city commercial banks use debt-to-equity swaps to “replenish blood” ==============

Since 2025, facing profit pressures and increasing capital consumption, many city commercial banks have completed capital replenishment through debt-to-equity swaps.

Chongqing Bank’s total converted shares in 2025 amounted to 82,900 shares, corresponding to an increase of 82,900 A-shares. By the end of 2025, the remaining unconverted balance was 12.999 billion RMB. The conversion price was 9.67 RMB per share, later lowered to 9.50 RMB per share on January 7, 2026. Suzhou Bank’s convertible bonds (“Suyin Convertible Bonds”) increased its registered capital from 3.667 billion RMB to 4.471 billion RMB, an increase of 804 million RMB.

Apart from city commercial banks, rural commercial banks such as Changshu Bank also used debt-to-equity swaps. In 2025, Changshu Bank’s total converted amount was 535,000 RMB, adding 7,640 A-shares. In the fourth quarter, 24,000 RMB was converted, adding 4,065 shares. As of the end of 2025, the remaining unconverted balance was 5.999 billion RMB, with a conversion price of 5.89 RMB per share.

The 2026 government work report explicitly states, “Actively and prudently resolve financial sector risks. Increase resources and tools for risk disposal of local small and medium-sized financial institutions. Multiple channels to strengthen capital replenishment, and prudently dispose of non-performing assets.” This continues the policy tone of 2025, which emphasized “advancing risk disposal and transformation of local small and medium-sized financial institutions.”