Bank Performance Map Overview: Securing Key Regions, Deepening County Markets, and Clearing Existing Assets

Public bank performance reports have always been the most sensitive thermometer for the ups and downs of China’s financial system.

As of March 9, twelve A-share listed banks have densely disclosed their 2025 performance reports. In this preliminary list, the vast majority of banks still maintain positive growth in net profit attributable to parent.

Viewing these results within a broader economic framework reveals a stark contrast:

In 2025, the banking industry faces an unprecedented complex environment. Under countercyclical monetary policy adjustments, multiple cuts to the Loan Prime Rate (LPR) combined with concentrated adjustments to existing mortgage rates have continuously lowered financing costs for entities and residents. Meanwhile, bond market yields have declined unilaterally, greatly limiting the return space for financial market activities.

On the asset side, local government debt has entered deep waters, with many high-yield urban investment non-standard assets facing interest rate reductions and extensions. The real estate sector is undergoing a deep adjustment, and traditional expansion paths are substantially blocked; the rigid liabilities and declining asset yields also cause widespread pressure on net interest margins across the industry.

Amidst this chill, why do these “early bird” banks still deliver resilient results?

The answer lies beneath the surface of the profit statement.

The profit logic of the banking industry has fundamentally shifted; the faith in scale has completely failed, and we have irreversibly entered an era of highly differentiated “structural” development.

These 12 reports are not a microcosm of industry prosperity but are micro-samples of banks seeking efficiency from regional, customer, and existing assets.

Regional Beta

Bank assets and liabilities essentially mirror the local real economy. During periods of weak credit demand, being located in a vibrant economic heartland itself acts as a moat.

Xinfeng has observed that among the 12 banks that have disclosed performance, city commercial banks lead significantly in profit growth: Qingdao Bank ranks first with a 21.66% year-over-year growth in net profit attributable to parent; Qilu Bank follows closely with a 14.58% increase.

The high growth of these two Shandong-based banks is not accidental financial adjustment or base effect, but built on solid support from the real economy.

Zeng Gang, chief expert at the Shanghai Financial and Development Laboratory, told Xinfeng that the impressive performance of small and medium-sized banks in active economic regions is essentially a projection of regional industrial upgrading and structural economic dividends.

Luo Pengfei, researcher at Postal Savings Bank, also pointed out: “Banks in Shandong and the Yangtze River Delta region perform well mainly due to regional economic resilience. Rural commercial banks deeply rooted locally have a good understanding of regional industrial structures and customer needs, and policy support also favors their development.”

In recent years, Shandong’s GDP has maintained steady growth, surpassing 10 trillion yuan for the first time in 2025, with a 5.5% growth rate, making it the first northern province to join the “trillion-yuan club.”

Xinfeng found that by the end of 2024, the two banks mentioned above had among the highest five-year compound annual growth rates in net profit attributable to parent and total assets among northern listed banks.

Moving southward, Yangtze River Delta city commercial banks also demonstrated considerable resilience:

Hangzhou Bank achieved a net profit of 19.03 billion yuan in 2025, up 12.05%; Ningbo Bank’s net profit was 29.33 billion yuan, up 8.13%; Nanjing Bank’s net profit reached 21.81 billion yuan, up 8.08%.

The dense concentration of specialized, innovative enterprises and mature semiconductor and biopharmaceutical industries in Jiangsu and Zhejiang provides continuous credit support for local city commercial banks.

Whether it’s Hangzhou’s digital economy and intelligent manufacturing or Ningbo’s clusters of “single champion” enterprises, they all show the ability to take orders and generate profits across cycles.

This high prosperity micro-individual performance offsets the decline of traditional industries, leading to steady expansion of asset scale and, to some extent, supporting risk pricing on the asset side. These local banks thus gain more strategic depth in their interest margin defense battles.

Similar patterns are also evident among joint-stock banks.

Xinfeng noted that among joint-stock banks, SPD Bank achieved a profit increase of 10.52%, and CIB recorded a 2.98% growth; in contrast, China Merchants Bank and Industrial Bank’s growth slowed to 1.21% and 0.34%, respectively, with Huaxia Bank experiencing negative growth.

This internal contraction also reflects a nationwide trend of banks “shrinking their frontlines” toward high-growth regions:

One of SPD Bank’s core actions to regain growth is to emphasize the importance of the Yangtze River Delta, such as strengthening top-level design, upgrading the “Yangtze River Delta Integration Demonstration Zone Management Headquarters” to a “Yangtze River Delta Integration Management Headquarters,” and coordinating differentiated resource allocation for regional branches.

At the same time, they are establishing corporate business black-and-white lists, conducting industry and regional research by branch, granting full authority to white-listed clients, and gradually withdrawing blacklisted enterprises, aiming to further improve credit asset quality over 3-5 years.

Downscaling of joint-stock banks

Compared to city and rural commercial banks that can fully leverage regional dividends, larger nationwide joint-stock banks with bigger asset scales and broader business reach face more complex challenges.

If they lack absolute industrial dividends in specific regions, where else can large commercial banks seek profits?

The first answer reflected in the performance reports is: from existing stock assets.

With macro cycles shifting and deleveraging deepening, high-risk assets left from early aggressive expansion now burden some banks. The pace of clearing these historical burdens directly affects current profit release potential.

Equally important is the stock cleaning of retail assets.

Against the backdrop of fluctuating household income expectations, credit card and consumer loan businesses that surged in recent years are now experiencing a phased increase in non-performing rates. Some banks are actively shrinking high-risk retail exposures and increasing collection and write-offs of existing non-performing assets.

Take SPD Bank as an example.

As a representative of banks in deep transformation in recent years, its performance trajectory exemplifies the typical “risk mitigation bottoming out and rebounding” logic.

Years ago, faced with non-performing assets from early expansion, SPD Bank entered a painful “deep squat” period, implementing strict asset quality classification and major adjustments.

For a long time, to cope with historical non-performing assets, SPD Bank had to make large provisions for credit impairment, which greatly eroded current operating profits.

When incremental non-performing assets slowed and existing risks were largely cleared, the bank no longer needed to use high-cost current profits to fill provisioning gaps.

The previously accumulated excess provisions then became a “liquidity pool” for profit adjustment. Even if net interest income was under pressure and revenue growth slowed, stabilization of interest income could be smoothly converted into a strong rebound in net profit, illustrating a typical cycle bottom reversal.

Behind the 10.52% profit increase is a comprehensive strengthening of asset quality: SPD Bank’s non-performing loan ratio fell to 1.26% at the end of 2025, with a provision coverage ratio of 200.72%.

The second answer is seeking incremental growth in sinking markets.

For example, SPD Bank explicitly proposed moderately sinking its branch network, with concrete actions including the acquisition and restructuring of its rural banks.

Post-integration, the risk control models and credit resource allocation capabilities of these rural banks have significantly improved, becoming more effective tools for the parent bank’s county-level market expansion.

CICC analyst Wang Xianshuang pointed out that SPD Bank’s current “five major tracks”—technology, supply chain, and inclusive finance—embody the bank’s strategy of expanding into small and medium-sized enterprise clients and deepening corporate banking in lower-tier markets.

Local banks “master the region”

Compared to city and rural commercial banks that can fully leverage regional dividends, smaller banks like city and rural banks face a survival crisis mainly due to the “dimensionality reduction” tactics of large banks.

With scarce quality assets, regional dividends are being rapidly eroded by large bank expansion.

Zeng Gang believes that pure location advantage is fleeting, easily diluted by large financial institutions’ cross-regional expansion.

Especially in credit deployment for provincial state-owned enterprises, high-quality urban investment projects, and major infrastructure, price wars have become intense.

Large banks leverage their low-cost liabilities to offer extremely low loan rates to attract top clients. If small and medium-sized banks blindly follow, they risk having their interest margins broken.

Luo Pengfei suggests that “mastering the region” is an inevitable trend for small and medium banks. Facing large banks’ capital cost advantages, they must leverage “personal relationships and local knowledge” to deeply cultivate county markets.

Zeng Gang also emphasized that small and medium banks need to systematize the “soft information” obtained from long-term local roots into high-threshold risk pricing models, upgrading from a single fund provider to comprehensive industrial financial service providers.

Proactively abandoning head-to-head competition and focusing on solid downscaling to serve niche customers are essential for breakthroughs.

In 2025, Su Nong Bank’s net profit attributable to parent increased by 5.04% year-over-year, with NPL ratio reduced to 0.88%.

This is the result of the bank’s grid marketing strategy, which involves deep engagement with local textile and equipment manufacturing SMEs, accurately understanding their real operations, and transforming long-tail clients that large banks cannot cover into quality assets.

Qilu Bank maintained a profit growth of 14.58%, with a low NPL ratio of 1.05%.

Behind this is the bank’s focus on county-level finance as a core engine for scale and profit growth, creating specialized credit products for modern agriculture and new urban residents in counties, with continuous outperformance in county loan growth.

However, Zeng Gang also stressed that downscaling is not about reckless expansion.

“Grassroots clients often lack standard collateral, requiring financial institutions to develop highly localized product matrices, differentiated credit mechanisms, and agile post-loan management systems to hedge the credit risks associated with downscaling,” he said.

Defense in weak regions

It must be acknowledged that the spotlight of capital markets always suffers from survivor bias.

Many listed banks that have not published performance reports may perform far below market expectations.

Beyond the glamorous A-share stage, there are a large number of unlisted small and medium-sized banks and grassroots financial institutions in vulnerable regions, facing extremely severe survival challenges.

When regional beta no longer represents dividends, small and medium banks lacking endogenous blood supply face not just profit metrics but the bottom line of survival.

Luo Pengfei believes that “in regions with weak economies, small and medium banks need to shift from pursuing scale expansion to ‘small and beautiful’ community banking, vigorously developing intermediary businesses, enhancing risk control through technology, and optimizing resource allocation through regional integration.”

Practically, these institutions are showing a very pragmatic defensive posture.

First, they give up the illusion of being all-in-one banks, focusing on single niche penetration.

In declining industries, banks can only concentrate their limited credit resources on the remaining characteristic industries and supply chains; for example, resource-based provinces’ city commercial banks only serve large coal and non-ferrous enterprises, and agricultural provinces fully bind themselves to leading agribusinesses.

Zeng Gang said that the primary strategy for such small and medium banks is to implement extreme segmentation, precisely targeting specific advantageous industries or supply chain nodes, building vertical specialized financial service barriers, and forming a differentiated competitive landscape.

Second, extreme cost reduction to preserve the bottom line.

To avoid interest margin inversion, banks forcibly cut high-cost fixed-term deposits, refuse to absorb long-term expensive funds, and achieve a lightweight liability structure. On the operational side, they massively cut inefficient remote branches and redundant staff, reducing cost-to-income ratios.

Zeng Gang suggests that small and medium banks can leverage fintech to enable lightweight management models, compensate for shortfalls in technology investment, and improve control efficiency.

Third, collaborative defense to build the last line of protection.

When a single institution cannot absorb regional credit risks, frequent administrative mergers and reorganizations occur, such as the recent establishment of provincial rural commercial banks and the deepening reform of provincial associations, consolidating local legal entities into unified legal entities with larger balance sheets to hedge regional risk spikes.

Zeng Gang said that actively seeking market-oriented mergers and acquisitions is an important option for risk mitigation and breakthrough.

Through institutional integration, banks can “reduce quantity and improve quality,” completing a strategic transformation driven by quality and efficiency.

It’s worth noting that these 12 reports are just the tip of the iceberg.

The era of relying solely on license monopoly for easy wins is over. In the stock economy era, future banking will be extremely pure:

Either deeply binding to strong regional entities to earn certain dividends;

Or undergoing painful restructuring in pressured regions, seeking survival through extreme cost reduction and efficiency enhancement.

In the fight over existing assets, refined asset pricing, sharp downscaling risk control models, and penetrating the cycle of historical risks will be the only passports each financial institution holds in this foldable era.