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

Ask AI · How does frequent turnover of executives affect bank stability?

《Harbor Business Observation》Wang Lu

In its 2025 performance, Zhengzhou Bank delivered a mixed set of results. On the one hand, revenue and profits, asset growth, and the non-performing loan ratio were relatively solid; 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 soon after serving 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 (the reporting period), the company achieved a net profit of RMB 19.09 billion, up 2.44% year-on-year; operating income of RMB 129.21 billion, up 0.34% year-on-year. The non-performing loan ratio was 1.71%, down 0.08 percentage points from the beginning of the year; the provision coverage ratio was 185.81%, up 2.82 percentage points from the beginning of the year.

Compared with performance in previous years, Zhengzhou Bank’s 2025 performance was not actually bad, especially considering the negative income growth in 2023 and 2024. However, when looking over a longer period, Zhengzhou Bank’s 2025 income and profit also still fell short of 2019.

During the reporting period, Zhengzhou Bank generated net interest income of RMB 108.64 billion, up RMB 5.00 billion year-on-year, a rise of 4.82%, accounting for 84.08% of operating income. Among them: changes in business scale increased net interest income by RMB 7.67 billion, while changes in yield or cost rate reduced net interest income by RMB 2.67 billion.

At the same time, the company’s interest income was RMB 237.05 billion, up RMB 3.49 billion year-on-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 decrease of 18.13%, accounting for 15.92% of operating income. Among them: net fee and commission income was RMB 4.06 billion, down RMB 0.66 billion from the same period last year; 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 decrease of 13.95%. The main reason was that during the reporting period, fees and commissions related to wealth management, capital management, securities underwriting, and bills acceptance declined.

2

Capital adequacy ratio and net interest spread continue to fall

What is worth noting is that for the capital adequacy ratio and net interest spread—two aspects crucial to the banking industry—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, those ratios were 12.06%, 10.81%, and 8.76% respectively.

Data shows that from 2021 to now, the company’s capital adequacy ratio has continued to decline.

During the reporting period, the bank’s net profit spread was 1.54%, down 0.09 percentage points year-on-year, and its net interest yield was 1.61%, down 0.11 percentage points year-on-year. The decline in net profit spread and net interest yield was mainly affected by falling market interest rates, adjustments to mortgage loan 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, and 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, as mortgage loan rates have declined due to policy adjustments, and given the fierce competition among commercial banks, the industry has generally faced downward pressure on net interest spreads.

In its banking industry 2026 investment strategy research report released on March 18, Huaruan Securities stated that the main pressure on banks’ interest spreads comes from the asset side. For existing loans, because the LPR has continued to be lowered in recent years, yields are affected by re-pricing; for incremental loans, newly issued loan pricing has remained at a low level, and the trend of yield “bottoming out and recovery” is still to be observed. In addition, yields on bonds, bills, and wealth management products have also kept falling. Against the backdrop of a shortage of assets, competition among banks for existing high-yield, high-quality assets intensifies, further squeezing the room for loan pricing to be marked up.

Huaruan Securities believes that some listed banks’ net interest spreads may be bottoming out and entering into recovery. Although listed banks’ net interest spreads overall declined in the first three quarters of 2025, the pace of decline has narrowed compared with earlier periods. The net interest spread decreases for the banks that disclosed relevant data were all within 5 BP, and some banks have already stabilized and rebounded. The momentum for spread recovery mainly comes from the liability side cost reduction. After multiple rounds of deposit rate cuts, with many high-interest time deposits maturing within the year, many customers still have needs for deposit allocation. Combined with commercial banks encouraging branches to increase short-term deposit targets, improvements on the deposit pricing side and structural adjustments both effectively support improvements in liability costs.

In its annual report, Zhengzhou Bank stated that it will closely monitor and continuously assess the impact of macroeconomic policies, economic and financial operations, and extreme weather on its business, and will take proactive measures to ensure that its financial position and operating results remain stable. At the same time, it will continue to track industries and enterprises whose performance is significantly affected by fluctuations in the economic cycle, strengthen risk prevention and control in key areas, adhere to high-quality development, innovation-driven development, and growth that emphasizes intrinsic value, as well as distinctive and differentiated development. It will continue to optimize the structure of assets and liabilities, and pursue balanced development in terms of scale, profitability, and risk.

3

Ongoing turmoil among senior executives

Beyond performance, the continued turmoil among Zhengzhou Bank’s senior executives has also attracted 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 roles as the bank’s executive director, president, and chair and member of the board’s risk management committee, as well as chair and member of the board’s consumer rights protection committee. Ms. Li Hong’s term as an executive director was originally set to end on the date the bank’s eighth session of the board expires. According to relevant regulations, her departure took effect on the date her resignation letter was delivered to the board. After leaving, Ms. Li Hong will no longer hold any position at the bank or any of its controlling subsidiaries.

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

On November 27, 2024, the Zhengzhou Bank’s 7th board of directors held the 6th special meeting in 2024 and approved the resolution on appointing Ms. Li Hong as president of Zhengzhou Bank Co., Ltd. The appointment agreed to appoint Li Hong as president, and she would officially assume her duties after her qualification is approved by the Henan Office of the National Financial Regulatory Administration.

It is understood that Li Hong was born in October 1970. She has a bachelor’s degree in economics in finance and accounting from Renmin University of China and an MBA in business administration from the University of International Business and Economics. Li Hong has worked at the Beijing branch of China Postal Savings Bank since 2008 for 16 years. She has 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 previously oversaw key front and back office functions including the corporate business segment, financial interbank segment, risk management, credit approval, legal compliance, operational management, finance and accounting/treasury, and the general office.

In its annual report, Zhengzhou Bank stated that Li Hong resigned from her positions as executive director and president because she needed to reallocate her time and energy due to her personal circumstances.

The annual report also disclosed that in 2025, several other senior executives left the company. They were as follows: Vice President Fu Chunqiao resigned on January 24 for work-related reasons; on February 12, Liu Jiuqing resigned from the position of assistant to the president for personal reasons; on March 25, Guo Zhibin resigned as vice president due to health reasons; on March 27, Sun Haigang resigned as vice president due to work adjustments, and Li Lei resigned as assistant to the president due to work adjustments. (Produced by Harbor Finance)