After the "throne" of city commercial banks changed hands, Bank of Beijing still hasn't given up
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Interest margin narrowing, weak balance sheet expansion, investment losses... When the cyclical and regional guillotine slowly falls, even the former “number one” city commercial bank cannot withstand it.
In the first three quarters, Bank of Beijing reported a mediocre performance:
Operating income and net profit attributable to shareholders were 51.588 billion yuan and 21.064 billion yuan, respectively, with year-on-year growth rates of -1.08% and 0.26%. These places the bank 31st and 33rd out of 42 A-share listed banks, both in the lower range among peers.
From the perspective of “volume, price, and risk” balance, although net interest margin is still declining, the non-performing loan ratio has dropped 0.02 percentage points since the beginning of the year to 1.29%. The continuous quarterly decline shows good progress in asset recovery.
Such results may not be bad for Bank of Beijing, which is still in the “deep water zone” of transformation.
But the market generally focuses on another topic—as the former “number one” city commercial bank, Bank of Beijing has already been surpassed by Bank of Jiangsu in revenue, profit, and assets.
Bank of Beijing is not insensitive to being surpassed by peers. Since the appointment of new chairman Huo Xuewen in 2022, the bank has launched a series of transformations from business to strategy;
Since 2025, it has further doubled down on expansion southward, striving for regional synergy and seeking breakthroughs amid challenges.
Growth Again in Trouble
It is becoming increasingly difficult for Bank of Beijing’s performance to climb.
In the third quarter this year, both its operating income and net profit attributable to shareholders declined year-on-year by 5.71% and 1.85%, respectively.
The sudden quarterly revenue drop was a heavy blow, and previously steadily rising profit reentered a downward range, causing profit growth for the first three quarters to fall to just 0.26%.
The balance sheet shows Bank of Beijing’s difficult efforts to boost performance.
In the first three quarters, the bank maintained rapid balance sheet expansion, with asset size growing 15.89% from the beginning of the year—the third highest among A-share listed banks, only behind Bank of Jiangsu and Bank of Chongqing.
The difference is that Banks of Jiangsu and Chongqing’s expansion was driven by lending business, while Bank of Beijing relied on financial investment and increased interbank placements.
Xin Feng’s calculations show that Bank of Beijing’s loan growth was only 7.53% in the first three quarters, lagging behind the other two banks by more than 10 percentage points;
Financial investment and interbank assets grew by 23.1% and 673.47%, respectively, far ahead of the bank’s overall asset growth, with financial investment assets accounting for 36.2% of total assets.
This means Bank of Beijing’s business focus is shifting from traditional lending to trading and financial markets.
On one hand, this may stem from its lacklustre loan expansion.
In recent years, commercial banks in the Beijing-Tianjin-Hebei region have had slower loan growth than the Yangtze River Delta: Huaxia Bank, Bank of Beijing, and Beijing Rural Commercial Bank’s loan growth rates in the first three quarters were 3.18%, 7.53%, and 2.1%, respectively—far short of the over 10% growth seen at leading city commercial banks in the Yangtze River Delta.
On the other hand, it has a relatively low capital adequacy ratio, requiring it to allocate to bonds (such as government bonds) with lower risk weights than loans.
By the end of the third quarter, Bank of Beijing’s capital adequacy ratio was only 12.83%, higher than the 8% regulatory requirement but ranking mid-to-low among listed banks.
Since 2019, many commercial banks have supplemented capital via convertible bonds, additional share issues, and rights offerings. For example, Bank of Jiangsu raised 20 billion yuan in convertible bonds and 14.8 billion yuan from a rights issue in 2019-2020.
Bank of Beijing’s last additional share offering was in 2017, and only in 2025 did it issue 20 billion yuan in perpetual bonds to supplement Tier 1 capital.
With loan expansion losing momentum, Bank of Beijing’s diversified allocations to address “asset scarcity” are understandable:
Traditional bonds offer stable interest income and windows for future capital gains;
Interbank placements, though with lower yield, are highly liquid and can optimize asset-liability management.
However, while asset allocation is diversified, heavy purchases of bonds can make fair value highly sensitive to interest rate volatility. If rates rise, investment portfolios may incur paper losses and erode capital.
In Q3 2025, the downward trend of long-term government bond yields was offset by “anti-involution” policies, strong stock market siphoning funds, and other factors leading to notable upward movement.
The analysis team at CMB Securities noted that in the current bond market adjustment, Bank of Beijing had substantial paper losses in its Q3 TPL (trading financial assets) accounts. Combined with last year’s high base, this led to a 15.98% year-on-year decline in other non-interest income for the quarter and dragged down net profit.
Alongside falling investment income, Bank of Beijing’s net interest margin is also trending down: at the end of Q3, its NIM was 1.28%, ranking mid-to-low among listed peers and dropping 0.03 percentage points from the previous quarter.
It’s calculated that in Q3, its net interest margin narrowed 0.04 percentage points quarter-on-quarter. Though the cost rate of interest-bearing liabilities fell 0.1 percentage points, it was insufficient to fully offset asset-side downward pressure.
With narrowing interest margins and sharp drops in non-interest income, even with reduced provisions, Bank of Beijing cannot stop the downward trend in profits.
However, core asset quality indicators do demonstrate its efforts at control:
First, both stock and ratio of non-performing loans have declined, keeping overall asset quality stable and lowering the non-performing loan ratio by 0.01 percentage points quarter-on-quarter to 1.29% at Q3-end;
The CMB Securities analysis team calculated that in the first three quarters, its new non-performing loan formation rate was 0.87%—down 0.08 percentage points from H1—with trend improvement and a firmer provision cushion. Overall, asset quality is trending positively.
Second, net fee and commission income maintained double-digit growth: up 16.92% year-on-year in the first three quarters—outperforming peers.
The bank actively developed its wealth management business, with new sales in personal wealth products surpassing last year's full-year increase, supporting high growth in fee income.
For the first three quarters, net fee income contributed 6.34% to total revenue, still far from becoming a pillar of income.
Third Year of “Fighting Back”
In terms of banking sector competition, Bank of Beijing’s biggest pressure is not short-term interest margin or bond market losses, but its current growth driver being unable to withstand the fierce assault from Yangtze River Delta peers.
Although the entire banking sector is under pressure, city and rural commercial banks in the Yangtze River Delta have outstanding performance and rapid expansion driven by local and surrounding business.
Based on Q3 report calculations, Bank of Beijing’s near three-year compounded net profit growth rate of 8.8% is now number one in the Beijing-Tianjin-Hebei region;
But in the same period, seven banks in the Yangtze River Delta (including Hangzhou, Changshu, Jiangsu) all had growth rates of over 30%, with 71.27%, 61.46%, and 56.82% for those three, respectively.
Clearly, profit growth in Beijing-Tianjin-Hebei and Yangtze River Delta banks is no longer on the same scale—and the pressure of being surpassed lingers. Bank of Beijing started exploring transformation early.
In 2022, the year when both revenue and profit were surpassed by Bank of Jiangsu, Bank of Beijing welcomed new chairman Huo Xuewen, who spearheaded several key transformations:
First, “internal improvement”—seeking new business focus but also enhancing overall competitiveness via digitalization.
For example, at end-2022, Bank of Beijing was the first in the sector to propose building the "specialized and sophisticated first bank", offering integrated financial services ("commercial bank + investment bank + private banking", "financing + intelligence + commerce") for these enterprises;
By end-June 2025, its tech finance loan balance reached 434.6 billion yuan, up 19% from year-start.
It promoted constructing child-friendly banks, building a dedicated service system for children via product, service, and ecosystem matrices; by Q3-end, number of child financial clients exceeded 2.38 million.
While strengthening featured businesses, it made digital banking a strategic focus.
In 2022, it specified five transformations (development model, business structure, client structure, operational capability, management style) under digitalization, unifying its data foundations, operating system, and risk control platforms.
Currently, digital transformation has entered 2.0 phase, adopting "All in AI" as a consensus, building a “1213” AI technology framework and upgrading both infrastructure and business scenarios.
Second, recognizing regional dividends, it moved south to seek new development space, and formed alliances with “brother” banks in Beijing-Tianjin-Hebei.
In 2022, it announced a Yangtze River Delta Integration Work Plan, specifying a three-year task list and timeline;
The next year, it proposed a new plan—to “build another Bank of Beijing” in the Yangtze River Delta.
To implement this plan, it took various actions in institutional setup and resource allocation, and in 2025 set up a Yangtze River Delta regional approval center to improve approval quality via parallel operations.
Externally promoting the “reconstruction plan”, internally the bank also formed strategic cooperation with Huaxia Bank and Beijing Rural Commercial Bank in Beijing.
In March 2025, Huaxia Bank, Bank of Beijing, and Beijing Rural Commercial Bank signed a strategic agreement, focusing on technological innovation and green low-carbon fields.
Though details were not disclosed, all three management teams expressed support for a “win-win cooperation” concept:
Bank of Beijing’s Huo Xuewen said the bank will continue to deepen construction of “five featured banks”, strengthening support for high-end manufacturing and SME sectors via tech and green finance.
Xin Feng notes that in recent years, these “brother” banks frequently exchange senior managers:
For example, current Huaxia Bank chairman Yang Shujian, vice president Tang Yiming, CIO Gong Weihua, and CRO Fang Yi all came from Bank of Beijing;
Bank of Beijing’s vice president Mao Wenli came from Beijing Rural Commercial Bank;
Beijing Rural Commercial Bank’s chairman Guan Wenjie and CIO Yi Yongfeng came from Huaxia Bank.
Currently, the three focus on technology, green, and SME fields for strategy—yet intensive managerial exchanges may mean their market penetration and strategic synergy in Beijing-Tianjin-Hebei far exceed peers, with alliances more solid.
Summing up these strategies, Bank of Beijing’s current ambition becomes clearer—
In core business, “specialized and sophisticated” enterprises are Beijing’s feature but also widely distributed in Yangtze River Delta; strengthening tech finance helps serve Beijing-Tianjin-Hebei as well as boosts competitiveness after expanding south.
Alliance-building with “brother banks” can avoid inefficient internal competition locally and focus resources on the affluent Yangtze River Delta.
However, so far, Bank of Beijing’s southward expansion is far from smooth:
By mid-2025, Bank of Beijing’s Yangtze River Delta lending was up 10.66% from year-start, but overall loan growth at Bank of Jiangsu, Ningbo Bank, and Nanjing Bank were 16.38%, 13.47%, and 10.41%, respectively;
This means Bank of Beijing’s expansion is still unable to surpass local forces.
In H1 2025, its Yangtze River Delta region profit contribution rose from 6.15% in 2022 to 12.69%, revenue contribution fell from 12.42% to 11.42%, and asset size share rose from 12.03% to 14.05%;
In reality, it is still far from its goal of “rebuilding another Bank of Beijing”.
The blueprint is drawn, but the journey is still full of obstacles.
At present, breakthroughs in southward expansion and regional synergy remain a bumpy road for Bank of Beijing; whether its transformation succeeds remains to be seen.
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