Is Xiamen Bank approaching a turning point for orderly risk clearance and recovery?

How does Xiamen Bank respond to a 400 million yuan loan dispute through risk management?

Produced by| Zhongfang Network

Reviewed by| Li Xiaoyan

Recently, a compulsory execution announcement involving a loan contract dispute of over 400 million yuan from Xiamen Bank has once again attracted market attention to the operational status of this Fujian-based listed city commercial bank. Against the backdrop of narrowing interest margins and increasing pressure on asset quality management across the industry, the bank’s phase performance fluctuations and individual risk events have been viewed by outsiders as a “stress test” on its development path.

Objectively, the challenges currently faced by Xiamen Bank include common pressures from the macroeconomic environment and industry cycles, as well as short-term pains during its own business restructuring process. However, it is not difficult to see through the financial report data and operational actions that the bank has not stagnated in the face of pressure, but rather has solidified its risk control foundation, optimized its asset-liability structure, and deeply engaged in the regional real economy with a more prudent posture. The short-term performance bottoming out does not signify a decline in development momentum; instead, it creates conditions for a subsequent lightened approach and steady rebound. As the saying goes, “The talented youths of Jiangdong are many; it remains to be seen if they will return,” relying on geographical advantages, adhering to compliance bottom lines, and continuously refining operations, Xiamen Bank is on a path of high-quality development that solidifies foundations, repairs quality, and builds up momentum for a rebound.

The disclosure of this litigation matter reflects Xiamen Bank’s openness, transparency, and proactive approach in risk management. The announcement indicates that due to the relevant enterprises’ failure to fulfill payment obligations on time, Xiamen Bank has applied to the court for compulsory execution, with the amount involved including the principal of 418.6765 million yuan and corresponding interest and penalties. In the face of this business risk, the bank has timely and fully made provisions for impairment, and has explicitly stated that this lawsuit will not have a significant impact on the company’s current and future profits.

This disposal method reflects Xiamen Bank’s mature risk anticipation and provisioning buffer capabilities. Even when facing the risk of a single large credit, it can minimize the impact on operational results through prudent provision before and lawful recovery afterward, fully demonstrating the professional standards of listed banks in compliance operations and risk resolution. Putting risks on the table and legally advancing disposals is, in itself, a manifestation of sound operations and standardized governance, rather than a signal of risk loss of control.

From the 2025 interim report, Xiamen Bank indeed delivered a performance report that showed significant pressure since its listing. In the first half of the year, it achieved operating income of 2.689 billion yuan, a year-on-year decrease of 7.02%; the net profit attributable to shareholders of the parent company was 1.158 billion yuan, a year-on-year decrease of 4.59%. Meanwhile, the non-performing loan ratio rose by 0.09 percentage points from the end of last year to 0.83%, and the provision coverage ratio fell to 321.67%, with multiple indicators showing phase adjustments.

However, interpreting the data against the industry backdrop allows for a more rational understanding of its volatility logic. In the first half of 2025, the entire banking industry was under pressure from a continuous decline in net interest margin, with the national commercial banks’ net interest margin dropping to a historical low of 1.42%. In an environment where the industry is generally under pressure, Xiamen Bank’s net interest margin slightly decreased from 1.14% to 1.08% compared to the same period last year, and the net interest spread fell from 1.06% to 1.04%, with the overall decline being moderate. More notably, its net interest margin in the second quarter had rebounded by 4 basis points from the first quarter, indicating that the bank’s asset-liability management strategy is beginning to take effect, and signs of stabilization at the bottom of the interest margin are already evident.

Further breakdown of the revenue structure reveals that the core of the profit phase pressure is not due to a significant slowdown in credit business, but rather due to disturbances in non-interest income from the market environment. In the first half of the year, Xiamen Bank’s non-interest net income decreased by 21.72% year-on-year, with fair value changes turning from positive to negative, which became the main factor dragging down revenue. This reflects the sensitivity of financial market operations to external interest rate environments, while also indicating that the bank’s traditional credit business remains stable, and its profit base has not been shaken.

In terms of profit performance, the total profit decline is greater than the net profit decline, mainly due to reasonable adjustments in income tax expenses. While this optimization belongs to the financial level, it also provides a buffer for the bank to stabilize profits and retain capital strength during the industry downturn, creating conditions for continuous investment in the real economy and optimizing the business structure.

Regarding asset quality, the market is particularly concerned about the decline in the provision coverage ratio. The drop from nearly 400% to 321.67% does reduce the elasticity of future risk compensation to some extent. However, objectively speaking, this level is still well above the regulatory red line of 120% and significantly better than the industry average, indicating that the risk resistance bottom line remains solid. At the same time, the balances and proportions of loans under watch have achieved a “double decrease,” indicating that the pressure of potential risk migration on the asset side has eased, and a trend of marginal improvement in asset quality is forming. Although non-performing loans have increased, they are mainly concentrated in cyclical industries such as manufacturing and wholesale retail, in line with the characteristics of the current economic recovery stage, and there has been no regional or systemic risk diffusion.

Currently facing challenges, Xiamen Bank’s response strategy is clear, and its actions are solid, having achieved effective cost control on the liability side. Data shows that in the first half of the year, Xiamen Bank’s average interest rate on deposits decreased year-on-year, with the interest rate on corporate deposits reduced by 38 basis points and the interest rate on personal deposits dropping by 16 basis points, achieving significant cost reduction on the liability side. This lays a solid foundation for stabilizing net interest margins and improving profitability, and reflects the bank’s refined management capabilities in customer base, deposit structure, and fund pricing.

As a city commercial bank rooted in Xiamen and oriented towards the economic zone of Haixi, the geographical advantage is Xiamen Bank’s most core and lasting competitive strength. The private economy in Fujian and Xiamen is vibrant, foreign trade is developed, and Taiwan-funded enterprises are concentrated, providing a broad business space. The semi-annual report shows that in the first half of the year, the bank’s corporate loans grew by 17.21%, green credit increased by 29.58%, and technology loans rose by 18.59%. The precise allocation of credit resources towards policy-encouraged and promising real fields not only aligns with regulatory guidance but also brings stable income and deposit retention.

In the future, Xiamen Bank’s path to rebound should not pursue drastic reversals of short-term indicators, but should adhere to a prudent route of gradual repair and structural optimization. On the liability side, it should continue to deepen its local engagement, relying on transaction banking, cash management, payroll services, and other basic businesses to vigorously expand low-cost settlement deposits, thereby solidifying the advantage of low-cost funding; on the asset side, it should not blindly pursue scale expansion, but rather enhance risk pricing capabilities, directing more resources toward quality manufacturing, green finance, technology finance, and finance for Taiwanese enterprises, improving asset yield and risk matching. At the same time, it should moderately optimize financial market business strategies, enhance the robustness of investment portfolios, smooth out fluctuations in non-interest income, and promote a more balanced profit structure.

The development of the banking industry is never a sprint; it is a long-distance race that tests endurance, determination, and professional ability. After undergoing phase adjustments, Xiamen Bank is in a critical window period of “solidifying the foundation, optimizing the structure, and honing internal skills.” The lawful disposal of individual risk events and the rational fluctuations in short-term performance are normal pressure releases and risk cleanups in the development process.

In the future, with the continuous recovery of the regional economy, gradual stabilization of interest margins, and ongoing optimization of the asset-liability structure, Xiamen Bank is expected to transform its current performance “depression” into a “reservoir” for future growth, leveraging its solid customer base, distinct geographical characteristics, and continuously improving operational management.

After the storm comes the clear sky; after the adjustment comes the leap. By adhering to the original intention of serving the local community, the real economy, and the citizens, stabilizing the foundation, and enhancing competitiveness, Xiamen Bank is fully capable of achieving a steady rebound in operational performance, carving out a uniquely valuable recovery path within the regional financial landscape, and providing a more stable and higher-quality development answer to the market and investors.