Live Coverage of the Earnings Conference | "Changing the Path Dependence on Scale Benefits and Resource Investment," Qingdao Bank Management Responds to Hot Topics Such as Net Interest Margin, Dividend Distribution, and Asset Quality

Every Daily Journalist | Li Yuwen    Every Daily Editor | Liao Dan

“In the new strategic period, we have come to realize that we must change the path dependency of the past when it came to scale dividends and resource investment. We need to shift to specialized, digitized-and-intelligent, refined, and system-based development, and build core competitiveness.” On April 2, Wu Xianming, President of Bank of Qingdao, said at the bank’s 2025 annual performance briefing.

By the end of 2025, Bank of Qingdao’s total assets exceeded 800 billion yuan, reaching 814.96B yuan, up 18.12% year over year. In 2025, the bank recorded operating income of 14.57B yuan, up 7.97%; net profit attributable to shareholders of 5.19B yuan, up 21.66%.

Zhang Qiaowen, Secretary to the Board of Bank of Qingdao, said that for fiscal year 2025, the bank planned to distribute cash dividends of 1.8 yuan for every 10 shares, with a total dividend amount of about 1.05B yuan. This is also the first time the bank’s annual dividend exceeds 1 billion yuan.

At the meeting, management also responded to hot-button issues such as net interest margin (NIM) management and the reduction of non-performing assets.

Achieve the goal of exceeding 10 trillion yuan in total assets in the new strategic period

“Back in January 2025, we kicked off the development of our new three-year strategic plan, and we basically completed the final draft within one year.” Wu Xianming explained in detail the four strategic goals in this plan at the performance briefing.

The first is capability-driven. Relying only on consuming capital and expanding scale makes it difficult to achieve long-term high-quality development. Therefore, we considered shifting to specialized, digitized-and-intelligent, refined, and system-based development to build core competitiveness and follow a capability-driven development model.

The second is organizational agility. “As Bank of Qingdao is a small- and medium-sized bank, we want to be agile, respond quickly, and deliver high-efficiency reactions—this is the advantage we want to establish in competing with peers.” Wu Xianming also noted that with the development of artificial intelligence technology, the bank’s current organizational structure will change to some extent in the future.

The third is improving both quantity and quality. “In the new strategic period, we will continue to maintain a reasonable growth pace for scale, achieve the goal of exceeding 10 trillion yuan in total assets, and we will also continue to maintain strong profitability. Return on net assets will remain at a mid-to-upper level among listed urban commercial banks.”

The fourth is healthy and sustainable development. “We will firmly守守 the lifeline of asset quality, firmly establish a development philosophy of capital conservation, vigorously develop fee-based intermediary business, and comprehensively promote a transition to a light-capital model. Only with risk under control and capital deployed intensively can we ride through cycles and truly achieve healthy, sustainable development.”

Take multiple measures to stabilize NIM; strengthen KPI assessment of deposit-loan spread and fee income proportion

In 2025, Bank of Qingdao’s net interest margin was 1.66%, down 0.07 percentage points from the previous year.

“Against the backdrop of the overall decline in market interest rates and the effort to pass benefits on to the real economy, the narrowing of the interest spread is also a common issue faced by the banking industry at present.” Li Zhen’guo, the bank’s planned finance department general manager, said that the bank will take measures mainly from several aspects to stabilize the NIM.

First is assessment of resource allocation. Emphasize the weighting of efficiency-related indicators such as operating revenue, and strengthen KPI assessment of deposit-loan spread, fee income proportion, economic capital return, and other indicators.

Second is asset management. Place importance on structural optimization, increase the share of high-yield assets in interest-earning assets, step up loan origination, and promote growth in investment scale.

Third is liability management. Actively expand the sources of deposits, encourage marketing such as low-cost demand deposits from peer institutions, and increase the use of borrowed funds such as re-lending. At the same time, proactively adjust pricing strategies, strengthen interest rate market-oriented adjustments on deposits, and do a good job in managing the cost rate of liabilities.

Regarding the outlook for NIM going forward and the influencing factors, Li Zhen’guo said that from the external environment, there remains a certain level of uncertainty. Loan demand is still relatively weak, industry competition is intensifying, and the situation of interest rates on loans declining and bond yields fluctuating at low levels continues. The yield on the asset side will continue to fall, and the bank’s operations will still face pressure from a narrowing NIM. However, judging by the broader trend in how bank NIM performs across the industry, signs that the industry’s interest spread may stabilize have already begun to emerge. Going forward, Bank of Qingdao will continue to do a good job of NIM management and maintain NIM performance that is better than its peers.

Cumulative cash dividends exceed 6.4 billion yuan since listing on A-shares

According to Bank of Qingdao’s 2025 profit distribution proposal, the bank will distribute a cash dividend of 1.8 yuan per 10 shares (including tax). The distribution amount is about 1.05B yuan, accounting for 21.15% of net profit attributable to ordinary shareholders of the parent company in the consolidated financial statements.

From the dividend amount perspective, this is the first time the bank’s annual total dividend exceeds 1 billion yuan, up 12.5% from the previous year.

Zhang Qiaowen said that since Bank of Qingdao listed on A-shares in 2019, including the 2025 cash dividend, the bank’s累计累计 cumulative dividends have already exceeded 6.4 billion yuan. The average dividend amount as a proportion of net profit attributable to ordinary shareholders is about 30.91%.

Generally speaking, a bank’s dividend decision needs to take into account many factors, including regulatory requirements, the level of capital adequacy ratio, profitability, strategic planning, and shareholder returns. Among these, the capital adequacy ratio is one of the core regulatory indicators for the banking industry. By the end of 2025, Bank of Qingdao’s capital adequacy ratio was 13.37%, and its core tier-one capital adequacy ratio was 8.67%, with both declining year over year.

Zhang Qiaowen noted that in recent years, Bank of Qingdao has put a great deal of effort into capital management. The bank’s new three-year strategic plan clearly states that it will continue to increase support for the real economy, and maintain improvements in business scale growth, profitability, and risk resilience. “All of this requires more sufficient capital as backing. At present, there are still some limitations on external capital replenishment, so the importance of internal capital replenishment for Bank of Qingdao is even more pronounced.”

Zhang Qiaowen said that the bank is also working to build a stable, timely, and sustainable investment return mechanism. “Through its articles of association and shareholder return plan, we commit to investors at large that each year, the profits distributed to ordinary shareholders in cash will not be less than 20% of the distributable profit attributable to our ordinary shareholders for that year.”

Non-performing loan ratio has declined for eight consecutive years

By the end of 2025, Bank of Qingdao’s non-performing loan ratio was 0.97%, down 0.17 percentage points from the end of the previous year. “The non-performing loan ratio has declined for eight consecutive years,” Zhang Qiaowen mentioned when introducing the bank’s performance.

Bank of Qingdao’s vice president Zhang Meng introduced the bank’s asset quality control measures, including strengthening substantive risk management, optimizing the post-lending credit management system, and deepening the construction of the risk monitoring system.

Zhang Meng also responded to asset quality issues related to the bank’s corporate real estate exposure. By the end of 2025, Bank of Qingdao’s corporate real estate loans were about 23.7 billion yuan. The overall non-performing loan ratio on corporate real estate was 1.61%, down 0.46 percentage points from the end of the previous year. The non-performing amount was about 382 million yuan, down 95 million yuan from the end of the previous year. “Our corporate real estate loan share is relatively small—less than 6% of total loans—so it has limited impact on the overall loan asset quality. In 2025, we did not add any non-performing loans in corporate real estate.”

Cover image source: Economic Daily News