Huaxia Bank Chairman Yang Shujian's first annual report: provisioning coverage ratio ranks at the bottom of the industry, falling below 150%

Ask AI · Yang Shujian Lands as Chair in His First Year: How Does Huaxia Bank Respond to the Bottom-Tier Provision Coverage Ratio?

On March 30, Huaxia Bank (600015.SH) officially released its 2025 annual report. This is the first complete set of annual performance results delivered by new Chairman Yang Shujian after taking office.

The financial report shows that the bank’s revenue and net profit both fell over the full year; its provision coverage ratio dropped to 143.30%, falling below the regulatory minimum requirement of 150% for the first time. Among listed banks that have disclosed their financial reports, it ranks at the bottom.

Both Revenue and Net Profit Down

In 2025, Huaxia Bank’s core performance indicators declined, making it one of the few samples among joint-stock commercial banks where both revenue and net profit decreased. The financial report shows that for the full year, the bank achieved operating income of 91.91B yuan, down 5.23B yuan year over year, a decline of 5.39%; it recorded net profit attributable to shareholders of the parent company of 27.2B yuan, down 476M yuan year over year, a decline of 1.72%.

In terms of scale, Huaxia Bank maintained a steady expansion. By the end of 2025, the bank’s total assets reached 4,737.619 billion yuan, up 8.25% from the end of the previous year; total loans were 2,566.666 billion yuan, up 8.47%; total deposits were 2,381.699 billion yuan, up 10.71%. Loan and deposit growth both hit the highest levels in nearly five years. However, the growth in scale did not effectively translate into higher profitability, mainly due to the cumulative impact of multiple factors.

Affected by industry-wide common factors such as the continued decline of the LPR and deposit cost rigidity, the bank’s net interest margin continued to narrow. In 2025, Huaxia Bank’s ratio of net interest income to operating revenue reached 68.49%, making it highly dependent on interest spreads, so profitability was greatly affected by changes in interest rates. At the same time, the bank’s non-interest income growth was weak: fee and commission income and investment returns failed to provide effective support, unable to offset the pressure from the decline in net interest income, which led to a disconnect between balance-sheet expansion and profit growth.

Regarding asset quality, by the end of 2025, the bank’s non-performing loan (NPL) ratio was 1.55%, down 0.05 percentage points from the end of the previous year. The balance of NPLs was 39.89B yuan, up 1.97B yuan from the end of the previous year. Loans under watch were 68.58B yuan, up 7.54B yuan from the end of the previous year, and their proportion rose to 2.67%.

Provision Coverage Ratio at the Industry Bottom

Caijing’s panel has noted that in 2025, Huaxia Bank’s provision coverage ratio saw a sharp decline.

As a core indicator for measuring a bank’s ability to withstand risk, the provision coverage ratio directly reflects the bank’s capacity to absorb losses from NPLs. It is also one of the indicators that regulators focus on. The financial report shows that Huaxia Bank’s provision coverage ratio at the end of 2025 was 143.30%, down 18.59 percentage points from 161.89% at the end of the previous year. It fell below the regulatory minimum requirement of 150% for the first time, ranking at the bottom among listed banks that have disclosed their 2025 financial reports.

Peer comparisons show that top joint-stock banks such as China Merchants Bank and Industrial Bank have kept their provision coverage ratios at above 200%. Among city commercial banks, Hangzhou Bank and Ningbo Bank have provision coverage ratios exceeding 400%. Huaxia Bank’s provision level remains at a low point in the industry.

The main reasons for the decline in the provision coverage ratio are threefold: first, in 2025, Huaxia Bank’s balance of NPLs increased by 1.97B yuan, while the provision balance only rose slightly, causing the coverage proportion of provisions over NPLs to fall passively; second, the double decline in revenue and net profit reduced Huaxia Bank’s retained earnings, leaving limited funds available to replenish provisions; third, in 2025, Huaxia Bank increased credit deployment to the real economy, tilting the loan structure toward the corporate sector. Some of the newly added loans had not yet entered the risk observation period, and the disposal progress for existing NPLs was slower than expected.

Although the provision coverage ratio fell below 150%, it still meets regulatory requirements. Regulators allow banks to dynamically adjust their provision levels within a certain range. Huaxia Bank has maintained compliance with capital adequacy requirements through internal capital replenishment and other means. However, a lower provision level may affect the market’s confidence in Huaxia Bank’s asset quality, which in turn could affect its financing costs and valuation performance.

The Difficult Breakthrough Under Yang Shujian’s Helm

Huaxia Bank’s performance and asset-quality results test Yang Shujian, the newly landed chairman.

On January 24, 2025, former Chairman Li Minji resigned as Chairman of Huaxia Bank, Executive Director, and from related responsibilities on special committees of the board for personal reasons, effective on the same day. On January 27, Huaxia Bank issued an announcement disclosing the matter. Li Minji served as Chairman of Huaxia Bank from April 2017, for nearly eight years. After his resignation, Huaxia Bank entered a nearly four-month “chairman vacancy period,” during which the President, Qu Gang, temporarily performed the chairman’s duties.

On February 27, 2025, Yang Shujian joined Huaxia Bank and served as Party Secretary. On March 17, Huaxia Bank’s board of directors elected Yang Shujian as Chairman of the ninth session of the board. On May 20, the National Financial Regulatory Administration approved Yang Shujian’s qualification to serve as a director and chairman of Huaxia Bank, and Yang Shujian officially took full office.

Public information shows that Yang Shujian has long served at Beijing Bank, holding roles including Deputy President and President, with experience in bank operation and management.

During Yang Shujian’s tenure, the banking industry was in a cycle where net interest margins continued to narrow and pressures on asset quality were rising. Huaxia Bank itself had issues such as bad loan legacy burdens and business-structure problems. As its first year in office in 2025, both its operating performance and provision-related indicators showed downward pressure.

Huaxia Bank faces multiple challenges going forward: first, it faces significant pressure on asset-quality management. The balance of NPLs and the balance of loans under watch both increased, potential NPL risks accumulated. After the decline in the provision coverage ratio, risk resilience weakened, and subsequent NPL disposal and provision-making will consume profits; second, profitability growth faces pressure. In 2025, Huaxia Bank’s net interest income accounted for 68.49% of operating revenue, indicating a high dependence on net interest margin. Non-interest income failed to form effective support; third, strategic implementation needs time. After taking office, Yang Shujian proposed “Ten Initiatives to Improve Business Operations and Development,” focusing on serving the real economy, optimizing the business structure, and improving management efficiency. Strategic implementation requires time and resource support, during which situations such as management-team coordination and adjustments to business directions may occur; fourth, industry competition intensifies. Among joint-stock banks, China Merchants Bank, Industrial Bank, Ping An Bank, and others have already built differentiated advantages. Huaxia Bank lacks advantages in business characteristics, customer base, technology investment, and so on, and faces substantial pressure to break through in homogeneous competition.