[Huachuang Financial Xu Kang Team] Chongqing Bank 2025: Double-digit growth in revenue and performance, net interest margin remains stable

(Source: Xiaokang Financial)

Huachuang Securities Bank Researcher Lin Wanhui

linwanhui@hcyjs.com

Huachuang Securities Financial Industry Research Director Chief Analyst Xu Kang

xukang@hcyjs.com

Summary

Event:

On the evening of March 24, Chongqing Bank disclosed its 2025 annual report, achieving operating income of 15.11B yuan, a year-on-year increase of 10.48%; net profit attributable to the parent of 5.65B yuan, up 10.49% year-on-year. The non-performing loan ratio increased by 1 basis point quarter-on-quarter to 1.14%, and the loan loss reserve coverage ratio decreased by 2.5 percentage points to 245.6%.

Commentary:

Strong growth in corporate loans, stable interest margins, and continued double-digit growth in revenue and performance. 1) Accelerated net interest income continues to support revenue growth. In the fourth quarter, strong corporate loan issuance and stable interest margins led to a high year-on-year increase in net interest income, with Q4 2025 net interest income up 47.7% year-on-year, and the growth rate increased by 26.7 percentage points quarter-on-quarter. Non-interest income fluctuated, mainly due to the decline in underlying asset yields, with agency wealth management income decreasing year-on-year, dragging down fee income, and bond market volatility in Q4 last year causing unrealized losses on bonds. These factors offset each other, so the full-year revenue growth in 2025 remained above 10%. 2) Asset quality remains generally stable, and net profit attributable to the parent maintains double-digit growth. Full-year net profit attributable to the parent increased by 10.49% year-on-year, slightly higher than the previous three quarters, mainly due to cost control and reduced taxes, with the cost-to-income ratio decreasing by 0.52 percentage points to 27.9%, and taxes down 37.2% year-on-year. Asset quality remains stable overall, with the non-performing loan ratio rising by 1 basis point quarter-on-quarter to 1.14%. Due to continued pressure on retail loan asset quality, provisioning has increased, with quarterly asset impairment losses up 47.5% year-on-year.

Benefiting from national major strategic initiatives, corporate loan issuance remains strong. Chongqing Bank’s loan scale maintained rapid growth, with a 20.7% year-on-year increase by the end of 2025, and the growth rate continued to rise by 0.6 percentage points quarter-on-quarter in Q3 2025, mainly driven by strong demand for corporate loans in Sichuan and Chongqing regions. 1) Corporate side: In Q4 2025, new corporate loans/bills totaled 10.85 billion yuan/2.4 billion yuan, with the year-on-year growth rate of corporate loans (including bills) at 26.9%, up 1.4 percentage points from Q3 2025. This was mainly supported by major national strategies such as the Chengdu-Chongqing twin-city economic circle, the New Land-Sea Corridor, and the provincial and municipal “33618” industrial strategy; 2) Retail side:

Retail loan demand weakened quarter by quarter, with retail loans down 0.9% year-on-year by the end of 2025, possibly because some retail credit demand was pre-spent in the first half, and early repayments also contributed, leading to declines in mortgage and personal business loans in Q4. The company’s self-operated consumer loans grew relatively well, with the “Jie e Loan” balance surpassing 10 billion yuan.

In Q4 2025, net interest margin remained stable, with interest rate changes on both assets and liabilities roughly offsetting. Based on beginning and ending period data, the quarterly net interest margin in Q4 2025 decreased by only 1 basis point to 1.39%; for the full year, the net interest margin remained flat quarter-on-quarter, up 5 basis points year-on-year to 1.38%. This was mainly due to continued reduction in funding costs. 1) Asset side: Estimated yield on interest-earning assets in Q4 2025 was 3.37%, down 13 basis points quarter-on-quarter and 16 basis points year-on-year. According to the company’s disclosed daily average balance, the loan yield at the end of 2025 decreased by 12 basis points year-on-year to 4.27%, mainly due to a larger decline in personal loan yields, with company and personal loan yields down 18 and 53 basis points respectively to 4.52% and 4.02%; 2) Liability side: Estimated interest-bearing liability cost rate in Q4 2025 was 2.02%, down 13 basis points quarter-on-quarter and 45 basis points year-on-year. According to the daily average balance data, the deposit cost rate at the end of 2025 decreased by 37 basis points year-on-year to 2.22%, mainly due to re-pricing of high-interest fixed-term deposits, with fixed-term and personal fixed-term deposits down 48 and 42 basis points respectively to 2.35% and 2.75%.

Overall asset quality remains stable, retail credit asset quality under pressure but still manageable. The non-performing ratio at the end of 2025 rose by 1 basis point quarter-on-quarter to 1.14%, with the estimated quarterly net new non-performing rate at 0.52%, down 0.39 percentage points quarter-on-quarter, indicating overall stability in asset quality. Forward-looking indicators show the watchlist/overdue rate decreased by 11 and 22 basis points in the first half of 2025 to 1.94% and 1.36%. This improvement mainly reflects better loan quality (down 4 basis points to 0.71%) compared to the first half, while retail loan asset quality faced more pressure (retail NPL ratio up 22 basis points to 3.23%), likely due to macroeconomic impacts reducing individual business owners’ repayment capacity, causing personal business loan NPLs to rise. However, from the structure of retail credit, the proportion of self-operated consumer loans with relatively better client quality increased, while personal business loans decreased quarter by quarter. As Chongqing’s regional economic recovery propagates to inclusive small and micro businesses, retail credit risks are expected to gradually ease.

Investment advice: Slight.

Risk warning: Economic growth below expectations; regional risk exposures; credit issuance below expectations.

Data tracking