Nanjing Bank’s 3 Trillion Yuan Balance Sheet Expansion Surge: “Volume-for-Price” and Profit Smoothing under Margin Pressure

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At a time when the banking industry is facing the dual pressures of narrowing interest margins and a scarcity of attractive assets, Bank of Nanjing has presented a seemingly impressive report card:

As of the end of 2025, its total assets reached 3.02 trillion yuan, a significant year-on-year increase of 16.61%. By the end of the first quarter of 2026, this figure had further climbed to 3.21 trillion yuan;

Reflected on the revenue side, in 2025 the bank achieved operating income of 55.542 billion yuan, up 10.48% year-on-year. First quarter 2026 revenue reached 16.111 billion yuan, with a year-on-year surge of 13.54%.

The core driving force behind this impressive performance comes from explosive growth in net interest income. In 2025 and the first quarter of 2026, net interest income grew at rates of 31.08% and 39.44%, respectively.

However, this does not mean that Bank of Nanjing has achieved exceptional pricing power against the market trend.

In fact, its net interest margin in 2025 was 1.82%, down 0.12 percentage points from the previous year.

This is a typical “volume over price” strategy built upon aggressive corporate lending. By the end of the first quarter of 2026, its outstanding corporate loans neared 1.2 trillion yuan, with growth rates exceeding 9% in areas such as green finance and technology finance.

Compared to the double-digit revenue growth, Bank of Nanjing’s profit growth appears quite “restrained.” In 2025 and the first quarter of 2026, attributable net profit grew steadily at 8.08% and 8.05% year-on-year, respectively.

Behind this stable fluctuation lies the rapid rise in credit impairment losses and the strategic adjustment of the “provision reservoir.”

In 2025 and the first quarter of 2026, credit impairment losses reached 13.884 billion yuan and 4.442 billion yuan respectively, with year-on-year increases of 31.91% and 40.09%.

To digest these massive impairments while keeping profits steady, management precisely tapped into the provision buffers accumulated over years: provision coverage rate dropped from 335.27% in 2024 to 313.62% by the end of 2025 and further down to 306.81% by the end of the first quarter of 2026.

Although this metric still reflects robust risk coverage ability, this model of “rising impairments plus provision feedback” has, to some extent, diluted the quality of profits.

Beneath the glossy aggregate data, structural divergence in asset quality and the weakness of non-interest income are also impossible to overlook.

Financial market volatility had a clear drag on non-interest income. In 2025, net non-interest income declined by 12.71% year-on-year. The main reason was the sharp decrease in fair value gains, with this item recording a loss of 2.512 billion yuan in 2025 compared to a gain of 7.377 billion yuan in the previous year, exposing the vulnerability of the trading book in the face of market fluctuations.

Meanwhile, asset quality in retail and real estate sectors is also under some pressure.

While the overall non-performing loan ratio remained stable at 0.83%, in 2025 the parent company’s personal loan NPL ratio rose to 1.49%, up 0.20 percentage points from the previous year-end. The NPL ratio for corporate loans invested in real estate reached 1.81%. Due to market adjustments, NPL ratios for mortgage, consumer, and business loans all showed signs of increase. Additionally, net cash flow from operating activities in the first quarter of 2026 dropped sharply by 67.03% year-on-year, reflecting structural adjustment pressures on the liability side.

Overall, Bank of Nanjing’s current fundamentals exhibit a distinct “spear and shield” characteristic.

On the one hand, it demonstrates strong capital supplementation and cost control capabilities. The 20 billion yuan “Nanjing Convertible Bonds” were converted two years ahead of schedule, raising the core Tier-1 capital adequacy ratio to 9.17% by first quarter 2026 — providing ample firepower for future balance sheet expansion in key regions. Meanwhile, the cost-to-income ratio dropped to 20.90% in the first quarter, a sharp decline of 5.17 percentage points from the start of the year, with fee control yielding immediate results.

On the other hand, its hidden risk lies in the real rate of asset quality consumption. Rapid balance sheet expansion masks the surge in credit impairment losses. As long as the expansion train keeps running, the provision safety cushion can still support the current profit promise.

But in the face of structural changes in macro credit demand, as well as marginal increases in retail NPLs, this financial model of smoothing profits by drawing down existing provisions may face more substantial stress tests in the future.

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