Regional small and medium-sized banks will maintain their capital increase trend within the year

This article is reprinted from: Securities Daily

Reporter: Xiong Yue

Recently, the official website of Hubei Bank Co., Ltd. (hereinafter referred to as “Hubei Bank”) published the bank’s targeted issuance report (hereinafter referred to as “the report”), revealing the recipients of its 1.8 billion share private placement. The report shows that the issuance targets include a total of 53 corporate shareholders, of which 18 are existing corporate shareholders and 35 are new state-owned corporate shareholders.

Since the beginning of this year, regional small and medium-sized banks have been continuously increasing their capital through targeted share issuance. Statistics show that more than 20 banks have been approved to increase their registered capital this year.

According to the report, Hubei Bank raised a total of 7.614 billion yuan from this issuance, all of which will be used to replenish the bank’s core Tier 1 capital, improve capital adequacy, strengthen capital strength, and enhance risk resistance. The bank’s registered capital has increased to 9.412 billion yuan.

After this issuance, Hubei Bank’s total share capital increased from 7.612 billion shares to 9.412 billion shares, and the proportion of corporate shares rose from 98.39% to 98.69%. The bank’s core Tier 1 capital adequacy ratio increased from 7.94% at the end of 2024 to 8.96% at the end of 2025, a rise of 1.02 percentage points.

The reporter’s review found that the 53 corporate shareholders include only one private enterprise, Jinpai Co., Ltd., with the rest being state-owned enterprises within Hubei Province. After the issuance, the proportion of state-held and state-owned corporate shares in Hubei Bank increased.

Public information shows that Hubei Bank was formed by merging five city commercial banks: Yichang City Commercial Bank, Xiangyang City Commercial Bank, Jingzhou City Commercial Bank, Huangshi City Commercial Bank, and Xiaogan City Commercial Bank. It was officially established in February 2011. By the end of 2025, Hubei Bank’s total assets are expected to reach 621.456 billion yuan.

In recent years, driven by needs such as risk mitigation and capital replenishment, regional small and medium-sized banks have been intensively increasing their capital through methods including targeted share issuance, rights issues, and introducing strategic investors. As we move into 2026, the trend of capital increase among small and medium-sized banks continues.

According to the reporter’s statistics, banks approved for registered capital increases this year include Shandong Weishan Rural Commercial Bank Co., Ltd., Shandong Sishui Rural Commercial Bank Co., Ltd., Hubei Shayang Rural Commercial Bank Co., Ltd., Hebei Zhengding Rural Commercial Bank Co., Ltd., among more than 20 banks.

Nankai University finance professor Tian Lihui told Securities Daily that under the current conditions of narrowing net interest margins and limited endogenous capital replenishment capacity, capital increases and share expansions have three positive effects for regional small and medium-sized banks: First, directly supplement core Tier 1 capital to meet regulatory requirements and enhance risk resistance; second, open up space for business development, as capital adequacy ratio constrains banks’ lending capacity, and replenishing capital expands support for local real economy and small micro enterprises; third, send a stable signal to the market.

It is worth noting that local state-owned assets have become the main participants in the capital increases and share expansions of regional small and medium-sized banks. Zeng Gang, director of the Shanghai Financial and Development Laboratory, believes that state-owned shareholders are relatively stable, and their credit backing helps boost market confidence and reduce financing costs for regional small and medium-sized banks; at the same time, banks controlled by state assets can better guide credit resources to support key local projects and industrial development.