"How much further can the rural commercial banks with the highest interest margins go?"
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While the entire banking industry is losing high-yield assets, a small number of banks are still consistently producing high net interest margins.
By the end of the first quarter of 2026, the net interest margin of commercial banks had dropped to a low range of 1.4%;
Changshu Bank still holds the top spot among A-share listed banks with a net interest margin of 2.50%. At the same time, its total asset size further increased to 419.435 billion yuan, continuing to expand from the end of 2025.
This is the 10th consecutive year Changshu Bank maintains the highest net interest margin among A-share listed banks.
In a context where low interest rates are almost reshaping the entire banking sector's balance sheet, such profitability has become increasingly rare.
Over the past decade, Changshu Bank has deployed a large amount of assets into county-level operations, forming a micro and small business system deeply embedded within the regional ecosystem.
This model has helped Changshu Bank to maintain a rare high yield for a long time, and it also made the bank’s asset quality, growth potential, and even profitability increasingly dependent on the vitality of regional county operations.
As low interest rates continue to compress profit margins, and regional economic momentum begins to slow at the margins, this model — which previously supported high net interest margins — is also starting to face new challenges.
How far Changshu Bank can go is becoming a new question.
A Different Kind of Retail Portfolio
The core of Changshu Bank’s high net interest margin comes from the asset side.
In 2025, the bank’s yield on interest-earning assets reached 4.28%, 42 basis points higher than the runner-up, Xi’an Bank; under the current industry-wide asset shortage, this level is already significantly above the peer average.
Breaking it down, in that year, Changshu Bank’s loan and advance yield was 5.18%; of which, corporate loans accounted for less than 40% of total loans and had a yield of just 4.08%, while retail loans, which made up more than 50%, had a yield as high as 6.46%.
The core of Changshu Bank’s high-yield assets does not come from corporate banking, but retail.
But even in retail, why can Changshu Bank maintain such a high asset yield for so long?
The answer may lie in the fact that what it does is not the kind of retail banking more familiar to the market.
For a long time, when the banking industry talks about retail, the focus has been on mortgages, credit cards, and wealth management.
Whether it’s “the king of retail” CMB, Ping An Bank which expanded through credit cards, or the aggressively expanding Ningbo Bank today, their retail growth is largely based on mortgages, consumer loans, and wealth management.
But Changshu Bank’s retail structure is clearly different.
In 2025, the proportions of mortgages, credit cards, business loans, and consumer loans were 0.91%, 5.27%, 36.81%, and 10.57% of total loans, respectively; for comparison, CMB’s data were 20.43%, 13.6%, 12.65%, and 6.18%.
Breaking retail loans further down into mortgage, consumption (credit card + consumer loan), and business, the contrast becomes even clearer—
For CMB, the three accounted for 39%, 37%, and 24% of retail loans, while for Changshu Bank, these were 10%, 21%, and 69%.
Retail focused on mortgages and consumption is still based on the expansion of household balance sheets;
In a downward interest rate cycle, the key for such banks to maintain NIM is to use wealth management and retail channels to accumulate more low-cost funds to invest in mortgages, consumer loans, and credit cards, thus matching low-cost funds with medium-yield products.
But what Changshu Bank relies on is a different ecosystem—
In its retail loans, nearly 70% are business loans serving mainly individual entrepreneurs, small manufacturers, county-level commercial clients, and micro/small businesses. The main financial needs here focus more on business turnover rather than housing or consumption.
This difference in loan structure has led the two retail models to diverge in the new cycle.
Over the past two years, many high-yield retail models have come under pressure, especially credit cards and consumer loans; as household income expectations weaken, risks have begun to surface rapidly;
For example, Ping An Bank experienced the bitter consequences of the “exchange of risk for return” in the down cycle, and had to take a “hard landing” to adjust its credit card business and protect existing assets. In 2025, its credit card loan portfolio was still shrinking, with retail business recovering more slowly than corporate.
But for Changshu Bank, which also relies on high-yield assets, asset quality remained stable during the same period.
As of the end of the first quarter of 2026, Changshu Bank’s non-performing loan ratio was only 0.75%, and the provision coverage ratio reached 438.1%. Among the 42 A-share listed banks, these indicators ranked 3rd and 2nd, respectively.
This is because consumer loans rely more on residents’ income and ability to spend, while business loans rely more on regional business activity itself;
Compared with the slowdown in household leverage, the county-level small and micro business ecosystem in southern Jiangsu remains fairly active. Local manufacturing, small commodity trading, and the operational networks formed by the regional industrial chain are still supporting business turnover demand.
So far, this high-yield model built on a county-level ecosystem has not yet shown signs of imbalance.
Incremental Growth “Run” Out
The framework for Changshu Bank’s business loan system is based on IPC micro-lending technology.
IPC technology was first developed by Germany’s IPC company, emphasizing weak collateral and focus on cash flow, making it more suitable for small and micro clients lacking standardized financial statements.
In 2005, with the World Bank and China Development Bank’s promotion, the technology entered China, and was later introduced by Changshu Bank in 2009.
As it developed, Changshu Bank continuously added “credit factories,” mobile platforms, and a deeper local network, gradually transforming micro-lending from being highly dependent on personal experience, to a retail business loan system that can be replicated in bulk.
This model quickly changed the structure of Changshu Bank's loan portfolio.
At listing in 2016, business loans accounted for 50.54% of retail lending, though corporate lending was still larger than retail lending at that time;
Between 2021 and 2024, the scale of retail business loans surpassed corporate loans, accounting for nearly 40% of total loans. Even by 2025, with a slight retreat, the gap from corporate loans was only 1.88 percentage points.
In recent years, business loans have undoubtedly become the core of Changshu Bank’s retail expansion.
With the rising share of business loans, the bank’s overall asset yield kept rising, with the net interest margin always ranking first among A-share banks since 2016.
Behind business lending is a comprehensive small/micro business system targeting county-level regions.
Changshu Bank chairman Xue Wen summarized the company’s strategy as “deeper, deeper, and deeper.”
A large number of small merchants and workshops lack standard financial statements or sufficient collateral; to serve these clients, you have to rely on loan officers going deeper locally.
In the past few years, the network has gradually been extended to townships, villages, and communities. Internally, this approach is called “ironfoot”—loan officers stationed at the grassroots long term, visiting clients quarterly, covering merchants, industrial chains, and village communities.
Too much reliance on personal experience also meant it was hard for this micro-lending system to expand quickly.
Later, Changshu Bank gradually standardized its approach and formed what the market now repeatedly refers to as the “Changyin Micro Finance” model;
With the only investment management license among rural commercial banks, this system started to overcome the restriction of “institutions and businesses not crossing county lines,” gradually expanding nationwide.
By 2025, revenue from outside Changshu accounted for over 70% of the bank’s total, with pre-provision profit at 74.05%;
At year’s end, the number of loan customers stood at 586,600, with an average loan balance of only 436,700 yuan; over 94% of loans were for 1 million yuan or less, the single largest loan accounted for only 1.39%, and the top ten customers just 7.39%.
Such a highly dispersed client structure makes it more likely that any risks arising in particular regions or industries appear fragmented, rather than as a systemic shock.
The selection of Changshu Bank’s management is also tightly linked with the “Changyin Micro Finance” model.
The IPC model relies heavily on loan officers.
Loan officers must use information from neighbors, suppliers, etc., to judge the client’s business and repayment willingness. Under an “integrated” system, the same loan officer is responsible for marketing, investigation, disbursement, and collection for a loan.
This means Changshu Bank prefers an internally cultivated management system.
Currently, the bank’s management is clustered at ages 45 to 47, significantly younger than industry peers. Former president Bao Jian and vice president Zhou Bin were born in the 1980s, current president Lu Dingchang in 1985;
More importantly, all three started from roles like teller or loan officer—demonstrating that "Changyin Micro Finance" not only reshaped the loan structure, but also the organizational structure of the bank.
The Boundary of Growth
For more than a decade, “Changyin Micro Finance” has been almost the most core source of Changshu Bank’s profit.
But as the low interest rate cycle deepens, the challenge is not that “Changyin Micro Finance” is failing, but that this high-yield model is now entering a low-return stage.
The most direct impact is the persistent decline in business loan yields.
With inclusive finance and persistent microloan price cuts, county-level business loan price competition is intensifying, with some areas’ rates now approaching 3%.
But risk exposure for business loans often lags significantly—
Many small and micro operators will maintain their loans by revolving them even when under operating pressure, so the true credit cost usually appears only 12 to 18 months later.
CMB Securities noted in its research that since 2025, the non-performing rate of Changshu Bank's personal business loans has ticked up, especially loans in the 500,000 to 1 million yuan range;
Thus, the risk in business loans is moving from high dispersion to structural differentiation.
Vice President Cheng Pengfei pointed out that, under current market conditions, “growth of retail loans is appropriate, growth rate moderate; we will always pursue effective growth on the premise of risk bottom line, not blindly fast growth.”
In Q1, Changshu Bank began actively balancing scale expansion and risk exposure; corporate loan growth year-on-year was 12.23%, but retail and personal business loan growth was only 1.2%.
The “ironfoot” model itself is also facing efficiency pressures.
Changshu Bank’s micro-loan system still relies heavily on human resources in depth—stationed at the grassroots and using cross-verification to lower information asymmetry risk.
But this model naturally comes with high labor costs—in 2025, per capita revenue was only 1.5528 million yuan, the lowest among listed banks (41st out of 42).
Shuyun notes that the bank’s reliance on “people” is evolving toward “people + systems.”
In recent years, the bank has advanced mobile solutions, cross-verification technology, and online risk control, weakening reliance on standard financial reports, and instead using real bank flows, inventory, and business behavior to check micro clients;
“Changyin Micro Finance” is shifting from experience-based to system-coordinated micro models.
The most crucial issue, however, is the regional economy itself.
While business loans are less connected to household balance sheets, they are heavily tied to regional industry prosperity.
Until now, county-level southern Jiangsu has maintained strong small business activity—manufacturing support, small commodity trade, and the operational industrial chain all underpinned business loan cash flows.
However, once regional business vitality slows, business loan risks may rise in parallel.
For Changshu Bank, which has long relied on business loan yields, further deepening alone can no longer offset the margin compression of the low interest rate environment;
Changshu Bank is also starting to reduce reliance on any single business loan, and increase the share of wealth management and fee income.
Chairman Xue Wen revealed that wealth management is now the bank’s “project number one,” which going forward will use client stratification, product optimization, and digital/intelligent operations to boost AUM and client penetration.
By year-end 2025, wealth management products amounted to 30.281 billion yuan; agent-sold wealth management was 11.169 billion yuan, and agent-sold insurance was 327 million yuan; private banking clients' total assets were 28.675 billion yuan, with 4,519 clients, up 18.83% year-on-year.
However, compared with banks such as CMB that use wealth management to drive retail, Changshu Bank’s strategy remains inclusive wealth management;
Its core clients are still mid- to low-net-worth individuals in counties, and the wealth business is more based on existing deposit and loan clients, aimed more at basic preservation and appreciation than at real wealth management transformation.
As loan yields continue to fall, the importance of fund business is also rising.
In the bond market of the past two years, Changshu Bank was once named by the market among the “four rural commercial bank dragons of rates bonds,” and in the 2024 “bond bull” phase, was disciplined by the dealers association for issues in secondary market treasury bonds trading.
In summary, “Changyin Micro Finance” helped Changshu Bank establish a high-yield, highly dispersed microloan system — but this high yield fundamentally depends on the vitality of the county-level economy;
As low interest rates further compress returns and regional economic growth slows, how far “Changyin Micro Finance” can go depends more on the soil of these counties themselves.
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