Net interest income accounts for over 80%, and the trillion-yuan Chongqing Bank still has a "scale mentality"

Source: Finance and Economics Hall

On the evening of March 24, Chongqing Bank, listed on both the A-share and H-share markets, officially released its 2025 annual financial report. The highlight that most draws attention is that the bank has successfully joined the “trillion-yuan bank club,” becoming another city commercial bank in the western region with assets surpassing one trillion.

In the chairman’s address in the annual report, Chongqing Bank Chairman Yang Xiuming could hardly conceal his excitement: “In 2025, it was an exceptionally extraordinary year for Chongqing Bank’s reform and development, and a year of milestone significance.”

Although Chongqing Bank delivered a performance with double-digit growth in both operating revenue and net profit in 2025, from the revenue structure perspective, net interest income accounts for as much as 82% of operating revenue—up sharply from 74% the previous year.

As for non-interest net income, not only does its share in revenue decline, but its total also drops year over year by 24%.

Is this good news, or worrying?

Finance and Economics Hall noted that, as net interest margins continue to narrow and the banking industry has fully shifted toward high-quality development, many banks have long abandoned the “scale obsession,” focusing instead on non-interest income tracks such as intermediary business and wealth management to optimize their earnings structure. However, Chongqing Bank clearly still needs to change its thinking in this regard.

Structural concerns behind the double growth in revenue and net profit

For Chongqing Bank, 2025 is indeed a landmark year. Its total asset size has officially crossed the one-trillion-yuan threshold, marking an important milestone along the path of developing as a regional city commercial bank.

The annual report shows that, as of the end of 2025, Chongqing Bank’s total assets reached 15.11B yuan, up 5.65B yuan from the end of the previous year, representing a year-on-year increase of 20.67%. In just one year, the asset scale surged by nearly 180 billion yuan, and its expansion pace can be described as extremely fast.

Corresponding to this, the operating performance data also shows an upward trend. In 2025, Chongqing Bank achieved operating revenue of 151.13 billion yuan, up 10.48% from the same period last year; it recorded net profit of 61.05 billion yuan, up 10.58% year over year, while attributable net profit was 531.29B yuan, also up more than 10% year over year. After several years, it returned to a channel of double-digit growth in both revenue and net profit.

Looking only at these key sets of figures, Chongqing Bank’s 2025 performance appears to be quite impressive: its asset scale has reached a new level, and its profitability indicators have rebounded in tandem, aligning with the market’s basic expectations for stable development among city commercial banks.

But if you dig deeper into the composition of operating revenue, you can find that the “quality” of this growth is greatly discounted. The growth in performance depends almost entirely on the traditional driver of net interest income, and its profit structure shows a clearly “imbalanced” pattern.

According to the annual report, in 2025 Chongqing Bank achieved net interest income of 124.59 billion yuan, up significantly 22.44% year over year. This figure directly supports the bank’s core revenue base, accounting for 82.44% of operating revenue—up noticeably from 74% in the same period of the previous year.

Compared with industry average levels, currently among major listed banks in China—especially joint-stock banks and top city commercial banks—net interest income share is generally kept below 70%. Some banks that have achieved notable transformation have reduced it to around 60%, while non-interest income has become the second growth curve for earnings.

With more than 80% of its revenue relying on net interest income, Chongqing Bank not only far exceeds industry-quality benchmarks, but also highlights its weakness: a highly single-asset earnings model and weak resilience to risks. Once market interest rates fluctuate or credit demand declines, its overall performance will face direct pressure.

Loan growth far outpaces revenue growth

Chongqing Bank’s earnings growth is, in essence, the result of a relatively extensive expansion driven by assets and credit scale—not an upgrade in operating efficiency or optimization of business structure. This is even more evident in the severe divergence between scale growth and revenue growth.

From core credit data, at the end of 2025, Chongqing Bank’s total balance of customer loans and advances reached 409.87B yuan, up 906.68 billion yuan from the end of the previous year, representing a year-on-year increase of as much as 20.58%, nearly double the growth rate of operating revenue at 10.48%. Of this, corporate loans became the main force behind the scale expansion. At year-end, the total balance of corporate loans was 598M yuan, up 30.95% year over year—setting new highs in scale, incremental amount, and growth rate across history.

Put simply, in 2025 Chongqing Bank’s loan deployment scale grew sharply by 20%, but the resulting increase in operating revenue was only 10%. The input-output ratio clearly deteriorated, and the marginal benefits of this extensive scale expansion continued to decline.

This kind of expansion model of “high input, low output” precisely confirms the hidden concerns of the traditional credit-driven model. In today’s low-interest-rate market environment, as banks’ net interest margins continue to face pressure, even though Chongqing Bank’s net interest yield in 2025 edged up to 1.39%, it still remains at a relatively low level within the industry. Relying solely on increasing credit deployment and making the scale bigger along the old path makes it already difficult to achieve synchronized high growth in returns. Instead, it may bring potential risks such as faster capital consumption and greater pressure on asset-quality management. Even if it achieves superficial growth in scale and profit in the short term, it will be hard to support sustained high-quality development over the long run.

Non-interest income takes a sharp drop

More worth noting is that while the share of net interest income continues to rise, Chongqing Bank’s non-interest income shows a substantial shrinking trend, becoming a prominent weakness in its earnings structure.

In 2025, the bank achieved non-interest net income of 888M yuan, down sharply 24.24% year over year, directly dragging down the overall quality of operating revenue growth.

Non-interest income is a core indicator for measuring a bank’s comprehensive operating capability and transformation effectiveness. It covers fee and commission income, investment gains, and other income from intermediary businesses. It is also a key lever for banks to get rid of reliance on net interest margins and to enhance the stability of profitability. However, Chongqing Bank’s non-interest income has not become a growth engine; instead, it has fallen sharply, with fee and commission net income performing particularly poorly.

The annual report shows that in 2025 Chongqing Bank’s net fee and commission income was only 5.98 billion yuan, down 2.90 billion yuan from 290M yuan in the same period of the previous year, a year-on-year decrease of as much as 32.66%, nearly one-third down.

Breaking it down by segment, the agency wealth management business revenue—the core business for wealth management—fell off a cliff. Full-year revenue was 344M yuan, down 335M yuan from the previous year, representing a year-on-year decline of 49.29%, close to a cut by half.

In explaining the sharp fall in fee and commission income in its annual report, Chongqing Bank said that it has mainly been in a low-interest-rate market cycle in recent two years. Due to the decline in returns from underlying assets, wealth management products’ fee income also decreased accordingly.

But this explanation is hard to fully cover the reality that the intermediary business layout is lagging and that the wealth management business lacks competitiveness. Compared with peers, despite facing the same low-interest-rate environment, many banks have achieved counter-cyclical growth in fee income by optimizing wealth management business and expanding areas such as investment banking, custody services, and payment settlement. Yet Chongqing Bank has failed to adjust its business strategy in a timely manner, and the downside of overreliance on traditional credit has been fully exposed.

The industry has long moved on from “scale obsession”

In the chairman’s address, Chongqing Bank Chairman Yang Xiuming emphasized that 2026 is the year of the start of the “15th Five-Year Plan,” and also the year when Chongqing Bank will lay a solid foundation as it steps onto a new starting point at the trillion-yuan level.

How to develop with high quality is the priority issue for Chongqing Bank to consider on top of its trillion-yuan scale.

Some industry insiders suggest that Chongqing Bank’s path to high-quality development needs the management to innovate work thinking.

Finance and Economics Hall notes that the current chairman, Yang Xiuming, is a typical talent with a background in traditional banking. Born in September 1970, he is currently 55 years old. He has more than 20 years of experience working at state-owned large banks. Previously, he served for a long time at Agricultural Bank of China’s Chongqing branch, holding posts such as a member of the branch Party committee and deputy general manager. In December 2023, he was transferred to become the Party Secretary of Chongqing Bank’s Party committee. In 2024, he was officially elected as Chairman of the Board.

Since Yang Xiuming took the helm, Chongqing Bank’s operating strategy has tilted toward traditional credit businesses, and its thinking about scale expansion is very clear. However, it has not put enough effort into capital-light businesses such as intermediary business and wealth management, which has caused Chongqing Bank’s pace of transformation to consistently lag behind peers. In contrast, looking at the broader trend of bank industry development, “scale obsession” has already been discarded. High-quality development, structural optimization, and capital-light operations have become industry consensus.

Previously, senior executives of China CITIC Bank stated multiple times at the bank’s financial report performance explanation meeting that, “We have completely abandoned ‘scale obsession’,” and that, “Our revenue growth is not achieved through extensive scale expansion; it is achieved through a better business structure and more refined management, with a higher level of quality.”

Not only China CITIC Bank, but also leading banks such as Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), and China Merchants Bank (CMB), as well as high-quality city commercial banks such as Ningbo Bank and Nanjing Bank, have been continuously compressing extensive credit expansion, vigorously developing businesses such as wealth management, investment banking, and financial markets, and constantly optimizing their revenue structure to improve the stability and sustainability of profitability.

Finance and Economics Hall notes that, because the pace of credit deployment growth exceeds 20%, Chongqing Bank’s capital consumption is too fast. Its capital adequacy ratio fell from 14.46% at the end of 2024 to 12.55% at the end of 2025, a decline of nearly 2 percentage points within one year.

As an important city commercial bank in the western region, Chongqing Bank should leverage regional economic advantages to accelerate business transformation and build a distinctive operating model. However, judging from the 2025 annual report data, its operating strategy has not yet kept up with the pace of industry change.

Industry insiders believe that, with ongoing pressure from the narrowing of banks’ net interest margins and the regulator’s continued guidance pushing banks to abandon extensive expansion and move onto a high-quality development path that prioritizes capital conservation and quality, Chongqing Bank needs to optimize its revenue structure, reasonably control the pace of credit expansion, make up for weaknesses in non-interest income, and lay out high-value-added intermediary businesses such as wealth management, investment banking, and custody. At the same time, it should optimize its operating performance evaluation system, gradually get rid of overreliance on traditional net interest income, and adapt to the timetable of industry transformation.