Facing the sudden offensive from city commercial banks, Huaxia Bank launches a "defensive battle" for performance.
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Against the backdrop of a reshuffling in the commercial banking sector, the ascent of city commercial banks is increasing the growth anxiety of the lowest-ranked joint-stock banks.
Huaxia Bank recently disclosed that its revenue and net profit attributable to the parent company for the first three quarters reached 64.881 billion yuan and 17.982 billion yuan, representing a year-on-year decrease of 8.79% and 2.86%, respectively.
Among the 42 A-share listed banks, Huaxia Bank ranks 40th and 37th in terms of growth rates for these two indicators, clearly revealing its sluggish performance and lagging behind the vast majority of banks.
Since 2025, the reshuffling of rankings has become the main theme among commercial banks. Whether it’s the Agricultural Bank overtaking the Industrial and Commercial Bank in market value, or Bank of Jiangsu surpassing Bank of Beijing in scale, all send the signal that strength is not necessarily permanent and core advantages are being reshaped.
Today, this trend has spread from banks of the same type to competition between city commercial banks and joint-stock banks.
In the first three quarters, while Huaxia Bank’s performance was under pressure, four city commercial banks—Bank of Ningbo, Bank of Beijing, Bank of Shanghai, and Bank of Nanjing—advanced by taking advantage and have already surpassed in terms of profits.
By the end of the third quarter, Huaxia Bank’s asset quality performed poorly, registering a non-performing loan ratio of 1.58%, the worst among A-share joint-stock banks.
What lies before Huaxia Bank is a dilemma:
If it abandons risk control in pursuit of growth, any future risks to asset quality will undoubtedly trigger more severe backlash;
If it strictly manages asset quality at the cost of slowing growth, the long-coveting city commercial banks might swarm in and further erode its market share in such main battlegrounds as Beijing-Tianjin-Hebei and the Yangtze River Delta.
Under defensive pressure, Huaxia Bank announced several personnel changes in October, involving the operations, finance, and risk control lines;
Combined with the chairman replacement at the beginning of the year, the management team overhaul is now complete, aiming to solve the lingering internal governance and risk control issues.
Profits “Saved” Rather than Earned
The first three quarters of 2025 marked the first time since 2010 that Huaxia Bank posted “double declines” for the third quarter.
However, behind this worst report card in years, there’s still hope for a turnaround:
In the third quarter alone, Huaxia Bank’s revenue and profit growth rates diverged sharply, with revenue dropping 15.02% year-on-year while net profit increased by 7.62%;
Since 2025, the profit growth rates for the three quarters have been -14.04%, -2.48%, and 7.62%, indicating a V-shaped reversal from negative to positive.
However, Xin Feng notes that,the marginal improvement in profit decline in the first three quarters mainly stemmed from cost-cutting rather than new revenue sources:
In terms of income structure, net interest income, which accounts for 70% of revenue, fell by 1.62% year-on-year;
Non-interest income grew 8.33% to 4.694 billion yuan, but owing to its small scale, its contribution to total revenue was only about 10%;
Changes in fair value, under the impact of bond market volatility, fell by 7.831 billion yuan year-on-year, significantly dragging down revenue.
The profit turnaround mainly relied on refined operation and reversal from provisions during the reform process:
First, in cost reduction: the “Nanniwan” operation to cut costs and improve efficiency was launched during the year, with an independent fund operation center set up in the organizational structure and the first chief operating officer appointed to support the new fund operation model. Operating expenses for the first three quarters were down 12.03% year-on-year;
Second, in provision reduction: credit impairment losses fell by 16.19% year-on-year, and the provision coverage ratio dropped from 161.89% at the beginning of the year to 149.33%.
Whether the profit rebound in the absence of growth engines is sustainable remains questionable.
Xin Feng’s analysis found that Huaxia Bank’s core credit revenue contribution has entered a contraction phase, falling from nearly 90% in 2020–2024 to less than 70%;
This was not due to the rise of asset-light businesses, but rather the passive decline caused by narrowing net interest margins and slowing balance sheet expansion. Over the same period, net interest income growth slowed from an initial 26.96% to -11.89%.
By the end of Q3, the bank’s net interest margin was 1.55%, mid-to-lower within the industry, down 0.04 percentage points from the beginning of the year;
Loans grew 2.93% from the start of the year through the first three quarters, maintaining balance sheet expansion but at a low rate, without resorting to an aggressive volume-for-price strategy.
Management’s cautious stance on expansion may be linked to Huaxia’s current asset quality.
At the end of Q3, Huaxia Bank’s NPL ratio was 1.58%, the worst among A-share joint-stock banks, 0.63 percentage points higher than the best, China Merchants Bank;
At the same time, capital adequacy was only 12.63%; while this exceeds the regulatory minimum of 8%, it remains at the bottom of the peer group.
These two lagging data points mean Huaxia Bank’s risk resolution capability is weak and it would struggle to deal with vicious cycles caused by reckless expansion. Thus, taking a cautious approach with a focus on risk control and refined management may be the better option.
Over the past year (since October 30, 2024), Huaxia Bank has closed 24 branches and opened 4 new ones, with the overall branch network contracting;
Unless asset quality and capital replenishment levels improve significantly, Huaxia Bank may find it hard to shift toward aggressive expansion.
Reform “Turning the Blade Inward”
In recent years when the banking industry as a whole has come under pressure, Huaxia Bank’s growth among joint-stock banks hasn’t been bad.
Xin Feng selected nine A-share joint-stock banks and found that from 2021 to 2024, Huaxia Bank ranked fourth in both compound annual growth rates of revenue (1.33%) and net profit attributable to parent (17.6%), a mid-tier performance;
Over the same period, its return on equity CAGR was 0.03%, the only positive value among peers.
This means Huaxia Bank’s most pressing problem now is not growth, but the risk control overlooked during past rapid expansion, accumulated non-performing burdens, and weak risk resistance capability.
Frequent regulatory compliance risks reveal a certain inertia of loss of control;
For example, in September, regulators issued a fine nearing 90 million yuan for imprudent management of loans and non-compliant data reporting uncovered during a 2023 on-site inspection.
For these historical issues, Huaxia Bank under its new management is making deep adjustments in its development approach—
At the beginning of 2025, former Bank of Beijing president Yang Shujian was parachuted in as Party Secretary and later became chairman;
At the end of October, three key senior management positions were announced: original Chief Risk Officer Liu Xiaoli became the newly created Chief Operating Officer, post-80s Fang Yi from Bank of Beijing took over as Chief Risk Officer, and Assets & Liabilities Department GM Liu Yue doubled as CFO.
This management reshuffle is seen as Huaxia Bank’s key move to respond to performance pressure and drive governance upgrades.
Organizational optimization is proceeding in parallel with personnel reform.
At the end of September, Huaxia Bank’s board approved the establishment of a fund operation center and adjustments to head office department structures:
The Planning & Finance Department will split into Financial Accounting and Asset-Liability Management; Trade Finance and Industrial Digital Finance departments will merge into the Transaction Banking Department; Consumer Rights Protection will be upgraded to a first-level department;
The Corporate Business Department is being renamed Corporate Finance; Data Financial Management becomes IT Management; Data Information becomes Data Management.
Previously, new chairman Yang Shujian initiated a “turn the blade inward” reflection campaign, urging the team to step out of its comfort zone, set new paths, and recognize the objective gap between itself and its peers.
By the end of Q3, Huaxia Bank had made phased progress in improving existing asset quality, with special-mention loan balances down 7.4% from the start of the year to 2.32% of the portfolio, and loss loan balances down 12.26% to 0.38%.
Management revealed that Huaxia’s non-performing loans are mainly concentrated in wholesale and retail, real estate, etc., which aligns with market trends. The bank said it will take a case-by-case approach to support and resolve risks in its existing real estate business.
Time Is Running Out
However, time is running out for Huaxia Bank to resolve its main contradictions.
On one hand, the profit room that can be squeezed out through austerity is already limited:
At the end of Q3, Huaxia Bank’s provision coverage ratio had fallen below 150%, entering the regulatory minimum zone of 120–150%, which means its ability to rely on provision reversals for profit in the future is minimal.
On the other hand, the pressure from fast-rising competitors is mounting:
During the period of sluggish growth for state-owned joint-stock banks, many city and rural commercial banks are still expanding rapidly;
Xin Feng’s statistics show that there are still six city commercial banks (such as Bank of Hangzhou) and two rural commercial banks with a compound annual growth rate of net profit attributable to parent above 15% for the past three years (2021–2024);
Three city commercial banks and two rural commercial banks posted a net asset return CAGR above 10% for the same period.
The top city commercial banks based in developed regions have long launched their assault against smaller joint-stock banks:
As of the end of Q3 2025, Huaxia Bank's profit has been surpassed by five city commercial banks, while its asset size has been surpassed by Bank of Jiangsu and Bank of Beijing.
More critically, while Huaxia Bank’s growth has slowed, the aggressive newcomers are still growing rapidly:
The five city commercial banks that have surpassed Huaxia Bank in profit all have much higher growth rates; even the slowest-growing, Bank of Beijing, is 3.12 percentage points ahead of Huaxia Bank.
Huaxia Bank’s main bases are Beijing-Tianjin-Hebei and the Yangtze River Delta, which contributed 51.26% and 32.54% of first-half profit, respectively—the same main battlegrounds for five major city commercial banks such as Bank of Beijing, Bank of Jiangsu, and Bank of Ningbo.
Swimming upstream: if there’s no advance, there will be retreat—
If growth stagnates for a long time, Huaxia Bank’s market share in Beijing-Tianjin-Hebei and Yangtze River Delta could be further eroded;
But with current tight capital supplementation levels, it cannot support the bank in opening more branches in western, northeastern, or county areas;
If Huaxia Bank cannot quickly complete reforms and return to a “self-replenishing” growth cycle, it may fall into an even greater passive situation.
For the future, president Qu Gang stated that retail transformation and digital risk control are already “whole-bank strategies” and the new planning path touches on the underlying logic of customer operations and risk management.
Strategically, the bank will focus on serving new advanced productive forces, increasing support for technological innovation and green finance, while also improving capital utilization efficiency and profitability to boost endogenous growth.
As of October 30, Huaxia Bank’s PB and PE ratios are 0.35 and 3.73, respectively, both at the bottom among peers.
Whether this round of reforms, led by new management, can help Huaxia Bank achieve a real breakthrough in the transformation wave remains to be seen.
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