Public business expansion "supports" revenue, but Xiamen Bank's capital consumption still faces medium- and long-term constraints.

```

On April 30, Xiamen Bank disclosed its financial reports for 2025 and the first quarter of 2026.

Against the backdrop of generally pressured net interest margins in the banking industry, this report demonstrates the specific path regional city commercial banks take to respond to cycles by adjusting their asset-liability structures.

In 2025, the bank’s annual operating income and net profit attributable to the parent increased slightly by 1.75% and 1.55% respectively, with the net interest margin narrowing to 1.09%.

By the first quarter of 2026, its operating income reached 1.519 billion yuan, up 25.05% year-on-year; net profit attributable to the parent recorded 693 million yuan, up 7.42% year-on-year.

The significant rebound in first-quarter revenue is mainly due to the “scissors difference” created by liability-side cost control and asset-side scale expansion.

In 2025, during the previous deposit repricing window, the bank reduced the average interest rate paid on corporate deposits by 51 basis points and personal deposit rates by 22 basis points.

The decline in funding costs was gradually reflected in net interest income growth at the beginning of 2026, with first-quarter net interest income reaching 1.162 billion yuan, up 23.57% year-on-year.

Beneath the revenue rebound, the underlying asset structure is undergoing a significant adjustment:

On one hand, retail business is showing a contraction trend.

At the end of 2025, the balance of personal loans and advances declined by 6.42% year-on-year to 65.935 billion yuan. Due to fluctuations in cash flow of some borrowers and early repayments, the non-performing loan ratio for personal loans edged up to 1.34%.

Conversely, corporate business became the main support for asset expansion.

In 2025, its balance of corporate loans and advances (excluding discounted bills) reached 165.859 billion yuan, a year-on-year increase of 35.85%. New credit was mainly directed towards policy-supported areas, with green loans, tech loans, and medium-to-long-term manufacturing loans seeing growth rates of 68.55%, 44.55%, and 26.27% respectively.

This lending trend continued in the first quarter of 2026: In the season, net cash flow from operating activities was -3.86 billion yuan, mainly due to increased loan and advance outflows, reflecting intensified credit extension. As the base for corporate lending expanded, the related non-performing loan ratio remained at a relatively low 0.60%.

At the asset quality level, headline NPL ratio continued to decline, at 0.77% at the end of 2025, and further down to 0.72% at the end of the first quarter of 2026. Meanwhile, provision coverage ratio dropped significantly: from 391.95% at the end of 2024, down to 312.71% at the end of 2025, and further to 307.04% by the end of the first quarter of 2026.

The decline in coverage ratio is a routine industry strategy to cope with profit pressures; a ratio above 300% is still relatively ample, but the effect of such adjustment tools is subject to diminishing marginal returns, and future profitability will need to rely more on true business growth.

In terms of business characteristics, the Taiwanese-capital background remains the core of Xiamen Bank’s differentiated competitiveness.

In 2025, the number of Taiwanese enterprises and clients increased by 19% and 23% respectively, with loans to Taiwanese enterprises growing by 56%, providing a stable incremental source for the asset side.

However, the expansion model of “making up for price with volume” is also accelerating capital consumption.

At the end of 2025, the bank’s capital adequacy ratio dropped 1.68 percentage points year-on-year to 13.62%, and core Tier 1 capital adequacy ratio decreased to 8.58%. In the first quarter of 2026, following the redemption of 1.5 billion yuan of perpetual capital bonds, its core Tier 1 capital adequacy ratio and capital adequacy ratio further dropped to 8.46% and 12.86% respectively.

Overall, Xiamen Bank’s current operating strategy reflects the realistic choices of city commercial banks under the present macro environment: guarding against risks on the retail side while relying on expansion in corporate credit and cost reductions on the liability side to maintain revenue growth.

In the medium and long term, when credit expansion is constrained by capital adequacy requirements and provision coverage ratio reverts to the industry average, the endogenous growth momentum of its balance sheet will face new tests.

Risk Warning and DisclaimerThe market has risks, investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account specific investment objectives, financial situation, or needs of any particular user. Users should consider whether any opinions, views, or conclusions in this article are applicable to their specific circumstances. Any investment based on this is at your own risk. ```