Same-city attack and defense battle: Yunnan Rural Commercial Bank defends the fortress, Chongqing Bank launches a fierce attack

Questioning AI · Chongqing Bank’s aggressive expansion: how to break the deadlock as capital adequacy ratios fall?

Produced by | Damo Finance

As both are located in the Western financial hub of Chongqing, Chongqing Bank (601963.SH) and Yunnan Rural Commercial Bank (601077.SH), as the “twin stars” of regional banks, disclosed their 2025 financial reports almost back-to-back.

In 2025, Yunnan Rural Commercial Bank recorded operating income of 28.648 billion yuan, up 1.37% year over year, and achieved net profit attributable to shareholders of 12.128 billion yuan, up 5.35% year over year.

By contrast, Chongqing Bank’s performance growth was even more rapid: operating income was 15.113 billion yuan, up 10.48% year over year, and net profit attributable to shareholders was 5.654 billion yuan, up 10.49% year over year.

Although the two banks share the same roots and are deeply rooted in the soil of Chongqing, their results look strikingly different. What Chongqing Bank delivered is a “leapfrogging answer” featuring assets exceeding one trillion yuan and double-digit growth in both revenue and net profit; what Yunnan Rural Commercial Bank delivered is a “ballast-stone performance” that keeps its scale at the top among rural commercial banks and sustains steady growth in profitability.

With distinctly different growth paces and business logic, the two banks together outline the differentiated development paths of city commercial banks and rural commercial banks in regional markets.

Rapid Scale Growth at Chongqing Bank

2025 was a pivotal year for the divergence in scale growth between Chongqing Bank and Yunnan Rural Commercial Bank. Chongqing Bank expanded in a high-growth manner and formally entered the tier of trillion-yuan banks; Yunnan Rural Commercial Bank, meanwhile, continued its steady pace and retained its position as the “No. 1” rural commercial bank in China.

In fact, Chongqing Bank’s scale growth rate has generally been faster than that of Yunnan Rural Commercial Bank, but before 2021 there was no huge gap. In recent years, Chongqing Bank’s expansion pace has clearly accelerated, with asset growth nearly twice that of Yunnan Rural Commercial Bank over the same period.

In terms of absolute size, Yunnan Rural Commercial Bank’s total assets still exceed Chongqing Bank by more than 60%, and it has a clear lead in both deposits and loans. However, thanks to Chongqing Bank’s higher growth rate, the gap between the two is gradually narrowing.

By the end of 2025, Chongqing Bank broke through the one-trillion-yuan threshold. Its total assets reached 10,337.26 billion yuan, with a year-on-year increase of 20.67%. Not only did it set the highest growth rate in recent years, it also became the second bank in Chongqing to have assets exceeding one trillion yuan. Among them, total loans were 5,312.85 billion yuan, up 20.58%; total deposits were 5,657.04 billion yuan, up 19.32%. Both loans and deposits achieved nearly 20% high growth simultaneously, becoming the core driving force behind the expansion in scale.

Yunnan Rural Commercial Bank’s total assets were 16,657.44 billion yuan, up 9.95%, and its growth rate also hit a new high in nearly four years, but it was only about half of Chongqing Bank’s. Its deposit balance was 10,287.28 billion yuan, up 9.21%, making it the first bank in Chongqing to have deposits exceeding one trillion yuan. Its loan balance was 7,972.87 billion yuan, up 11.62%, with both the loan and deposit scales remaining the top among peer banks in Chongqing.

From the footsteps of the two banks’ scale expansion, different development paths can be seen. Essentially, Yunnan Rural Commercial Bank relies on county-level branch coverage and a foundation in agriculture-related business, following a steady, deep-cultivation route with focus on stock. Chongqing Bank, on the other hand, relies on resource integration and the ability to invest in major projects, pursuing a “cutting to overtake” strategy through taking the bend and breaking through with increments; in 2025, these two models formed a sharp contrast.

Driven by a large surge in credit business, by the end of 2025, Chongqing Bank’s core Tier 1 capital adequacy ratio was 8.12%, its Tier 1 capital adequacy ratio was 9.35%, and its total capital adequacy ratio was 11.28%, each down by 0.35, 0.42, and 0.51 percentage points respectively from the previous year. Fast asset expansion of 20% consumed a large amount of capital, and with limited profit retention on top of that, the capital adequacy ratio declined noticeably. As a result, future expansion faces strong capital constraints.

Yunnan Rural Commercial Bank’s core Tier 1 capital adequacy ratio was 9.87%, its Tier 1 capital adequacy ratio was 10.75%, and its total capital adequacy ratio was 13.62%, down only slightly by 0.15–0.2 percentage points from the previous year. Backed by a higher level of profitability and steady asset expansion, its capital adequacy ratio remains ample, leaving sufficient room for subsequent business expansion.

Corporate-Driven VS Serving “Three Rural Matters” and Inclusive Finance

The most core difference between Chongqing Bank and Yunnan Rural Commercial Bank still lies in their business mix. In 2025, Chongqing Bank showed an imbalanced pattern characterized by corporate dominance and retail contraction, while Yunnan Rural Commercial Bank continued to take agriculture as the foundation, supported by inclusive finance, and implemented a balanced layout with retail collaboration.

In 2025, Chongqing Bank achieved operating income of 15.113 billion yuan. Of this, net interest income was 12.459 billion yuan, up sharply by 22.44% year over year. Its proportion of operating income rose to 82.4%, becoming the core engine of profit growth.

Chongqing Bank’s ability to perform strongly in credit business is closely related to credit support in areas such as the Chengdu-Chongqing twin-city economic circle, the Western Land-Sea New Corridor, and the construction of the Western Financial Center. To grow its scale, Chongqing Bank concentrated nearly all its firepower into the corporate sector, making substantial investments in infrastructure-related assets and other assets with relatively attractive returns. Last year, Chongqing Bank’s corporate loan balance exceeded 4,098.67 billion yuan, up 30.95% year over year.

In contrast with the strong credit business, the underlying weakness is that Chongqing Bank’s non-interest business has fragile profitability.

Data shows that in 2025, Chongqing Bank’s non-interest net income was only 2.654 billion yuan, down 24.24% year over year. Among them, net fee and commission income fell sharply by 32.66% year over year, and income from agency wealth management was nearly halved, with a year-on-year decline of 49.29%.

It is noteworthy that Chongqing Bank’s retail business recorded a historic loss last year, which is extremely rare in the bank’s operating history.

Meanwhile, Chongqing Bank’s retail loan non-performing ratio surged to 3.23%, up 0.52 percentage points year over year. The balance of retail non-performing loans accounted for more than 50% of the bank’s total non-performing loan balance. This means that what used to be seen as a stable profit stabilizer and a hope for future transformation—the retail segment—has now become the biggest pain point in asset quality.

Compared with Chongqing Bank, Yunnan Rural Commercial Bank’s business mix appears more poised and diversified. Although loans still do not account for more than half of total assets, the bank has built a relatively solid business moat through in-depth engagement in fintech, green finance, and inclusive small-and-micro loans.

Relying on more than 1,700 branches covering the entire Chongqing area, and deepening its efforts in county and rural markets, the bank ranks first in Chongqing in both agriculture-related and micro-loan businesses, forming a business matrix of “corporate steadiness as the foundation, retail expansion for incremental growth, and agriculture supporting the roots,” with stronger risk resistance.

Last year, Yunnan Rural Commercial Bank achieved net interest income of over 24.26 billion yuan for the full year, up about 7.85%, accounting for nearly 85% of operating revenue, and relied on its large deposit and loan scale to generate stable income.

Although Yunnan Rural Commercial Bank is ahead in terms of absolute profit level, its operating revenue growth looks relatively slow, with full-year operating revenue growth only 1.37%. As a rural-focused rural commercial bank that carries large amounts of inclusive finance and agriculture-related lending, the bank’s asset yield is more likely to be diluted when credit demand weakens and interest rates decline.

Similar to Chongqing Bank, Yunnan Rural Commercial Bank’s fee-income business is also not optimistic. Its non-interest net income for the full year was 4.388 billion yuan, down significantly by 23.92% year over year. The poor performance of the two banks in fee-income business sends an extremely unfriendly signal to the market. On the path to a low-capital transformation, the two banks are still far from building a truly wealth-management bank, with a considerable gap still in between.

Yunnan Rural Commercial Bank has also seen hidden concerns on the retail front. Its retail loan non-performing ratio rose to 2.07%, up 0.47 percentage points year over year. This means that during the economic transition period, pressure from personal credit is accelerating in its transmission toward regional banks.