Zhengzhou Bank's performance reversal takes another turn: capital adequacy ratio and net interest margin continue to decline, with ongoing management turbulence

《Harbor Business Observation》 by Wang Lu

In terms of 2025 performance, Zhengzhou Bank delivered a mixed set of results: on the one hand, income and profit, asset growth, and the non-performing loan ratio are relatively strong; on the other hand, the capital adequacy ratio, net interest margin, and net interest spread have continued to decline.

Meanwhile, the former president also left abruptly after serving in the role for only one year, which raises some concerns about the stability of Zhengzhou Bank’s core senior management.

1

Improvement in 2025 Performance

According to the annual report, as of the end of 2025, Zhengzhou Bank (Group) had total assets of RMB 7436.74 billion, up RMB 673.09 billion from the beginning of the year, a growth rate of 9.95%; total loans of RMB 4102.64 billion, up RMB 225.73 billion from the beginning of the year, a growth rate of 5.82%; and total deposits of RMB 4630.75 billion, up RMB 585.37 billion from the beginning of the year, a growth rate of 14.47%.

For 2025 (within the reporting period), the company achieved a net profit of RMB 19.09 billion, up 2.44% year over year; operating revenue of RMB 129.21 billion, up 0.34% year over year. The non-performing loan ratio was 1.71%, down 0.08 percentage points from the beginning of the year; and the provision coverage ratio was 185.81%, up 2.82 percentage points from the beginning of the year.

In comparison with performance in previous years, Zhengzhou Bank’s 2025 results are not actually bad, especially considering that 2023 and 2024 saw negative income growth. However, when looking at a longer time span, both the income and profit performance of Zhengzhou Bank in 2025 are still not as good as in 2019.

During the reporting period, Zhengzhou Bank recorded net interest income of RMB 108.64 billion, up RMB 5.00 billion year over year, a growth of 4.82%, accounting for 84.08% of operating revenue. Of which: adjustments in business scale led to an increase of RMB 7.67 billion in net interest income, while changes in yield rates or cost rates led to a decrease of RMB 2.67 billion in net interest income.

At the same time, the company’s interest income was RMB 237.05 billion, up RMB 3.49 billion year over year, an increase of 1.49%, mainly due to the increase in the scale of interest-earning assets. Non-interest income was RMB 20.57 billion, down RMB 4.56 billion from the same period last year, a decline of 18.13%, and accounted for 15.92% of operating revenue. Of which: net fee and commission income was RMB 4.06 billion, down RMB 0.66 billion from the same period last year; and other non-interest income was RMB 16.51 billion, down RMB 3.90 billion from the same period last year.

In addition, net fee and commission income was RMB 4.06 billion, down RMB 0.66 billion from the same period last year, a decline of 13.95%. This was mainly because, during the reporting period, fees and commissions from wealth management, fund management, securities underwriting and underwriting/acceptance business declined.

2

Capital Adequacy Ratio and Net Interest Spread Continue to Decline

Of note is that, for banks—where capital adequacy ratio and net interest spread are crucial—Zhengzhou Bank has continued to decline.

In 2025, the bank’s capital adequacy ratio, tier 1 capital adequacy ratio, and core tier 1 capital adequacy ratio were 11.71%, 10.44%, and 8.45%, respectively. In 2024, these ratios were 12.06%, 10.81%, and 8.76%, respectively.

According to available information, from 2021 to the present, the company’s capital adequacy ratio has continued to decline.

During the reporting period, the bank’s net interest spread was 1.54%, down 0.09 percentage points year over year; net interest yield was 1.61%, down 0.11 percentage points year over year. The decline in net interest spread and net interest yield was mainly affected by factors including the decline in market interest rates, adjustments to mortgage loan interest rates, and the re-pricing of the LPR.

From 2021 to 2024, Zhengzhou Bank’s net interest spread was 2.24%, 2.18%, 2.00%, and 1.63%, respectively, while its net interest yield was 2.31%, 2.27%, 2.08%, and 1.72%, respectively.

Some people in the financial industry believe that in recent years, with policy adjustments such as the downward move in mortgage loan rates, along with intense competition among commercial banks, the industry overall has generally faced downward pressure on net interest spread.

In a banking sector 2026 investment strategy research report released on March 18, Huayuan Securities stated that the pressure on bank interest spreads mainly comes from the asset side. For existing loans, because the LPR has continued to be lowered in recent years, yields have been affected by re-pricing; for incremental loans, the pricing of newly issued loans has remained at a low level, and the trend of yield bottoming out and repair is still to be observed. In addition, yields on bonds, bills, and asset management products have also continued to decline. Against the backdrop of asset scarcity, competition among banks for existing high-yield, high-quality assets has intensified, further squeezing the room for increases in loan pricing.

Huayuan Securities believes that the net interest spreads of some listed banks may be at the bottom and beginning to recover. Although listed banks’ net interest spreads declined overall in the first three quarters of 2025, the rate of decline narrowed compared with earlier periods. For banks that disclosed the relevant data, their declines were within 5 BP, and some banks have already stabilized and started to rebound. The momentum for spread recovery mainly comes from the reduction in costs on the liability side. After multiple rounds of deposit rate cuts, and with many high-interest fixed deposits maturing during the year, many customers still have needs for deposit allocation. Coupled with commercial banks guiding branches to increase short-term deposit performance assessment, improvements in the deposit pricing side and structural adjustments have been effective in supporting improvements in liability costs.

Zhengzhou Bank stated in its annual report that it will closely monitor and continuously evaluate the impact of macro policies, economic and financial operation, and extreme weather on its business, and take proactive measures to ensure that its financial condition and operating results remain stable. At the same time, it will continue to track industries and enterprises whose performance is greatly affected by fluctuations across the economic cycle, strengthen risk control in key areas, adhere to high-quality development, innovation-driven development, development with internal depth, and distinctive, differentiated development, continuously optimize its asset-liability structure, and strive for balanced development across scale, profitability, and risk.

3

Ongoing Management Turmoil

Beyond performance, the continuing turmoil among Zhengzhou Bank’s executives has also drawn attention.

On February 12 this year, Zhengzhou Bank issued an announcement stating that the board received Ms. Li Hong’s resignation letter. For personal reasons, she resigned from her posts as the bank’s executive director, president, chair of the board’s Risk Management Committee and member of the committee, and chair of the board’s Consumer Rights Protection Work Committee and member of the committee. Ms. Li Hong’s term as an executive director was originally set to end on the date when the eighth session of the board concludes. Pursuant to relevant regulations, her resignation became effective as of the date the resignation letter was delivered to the board. After stepping down, Ms. Li Hong will no longer hold any positions at the bank or in any of its holding subsidiaries.

In fact, as president, Ms. Li Hong served for only 1 year and 3 months.

On November 27, 2024, at the sixth extraordinary meeting of the seventh session of Zhengzhou Bank’s board of directors in 2024, the board deliberated and approved the “Proposal on the Appointment of Ms. Li Hong as President of Zhengzhou Bank Co., Ltd.”, agreeing to appoint Ms. Li Hong as president, and to have her officially assume the role after her qualification is approved by the Henan Office of the National Financial Regulatory Administration.

It is understood that Ms. Li Hong was born in October 1970. She holds a Bachelor’s degree in economics in finance and accounting from Renmin University of China, and a Master’s degree in business administration for senior executives from the University of International Business and Economics. Since 2008, Ms. Li Hong has worked at the Beijing branch of China Postal Savings Bank for 16 years. She has previously served as general manager of the Planning and Finance Department, senior business manager, party committee member, vice president, and chair of the trade union, among other roles. She has also handled major front-to-back and middle-to-back responsibilities, including overseeing the corporate business segment, financial interbank segment, risk management, credit approval, legal compliance, operations management, financial and accounting funds, and the office, among others.

In the annual report, Zhengzhou Bank stated that Ms. Li Hong resigned from her posts as executive director and president because her personal circumstances require her to reallocate her time and energy.

The annual report also disclosed that in 2025, multiple other senior executives also left the bank. They are: Vice President Fu Chunqiao resigned on January 24 due to work reasons; on February 12, Liu Jiuqing resigned from her post as assistant to the president due to personal reasons; on March 25, Guo Zhibin resigned from her post as vice president due to health reasons; on March 27, Sun Haigang resigned from her post as vice president due to a work adjustment, and Li Lei resigned from her post as assistant to the president due to a work adjustment. (Produced by Harbor Finance)

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