Is Wuxi Bank giving up?

Produced by | Caixin Society

Article | Jia Ru

Editor | He Bi

As the first rural commercial bank listed on the main board of A-shares nationwide, Wuxi Bank has consistently served as a benchmark and a role model for rural commercial banks across the country since it was listed on the Shanghai Stock Exchange in 2016, but judging from its 2025 financial report, Wuxi Bank really seems unable to “outwork the competition” anymore.

According to the 2025 financial report, as of the end of 2025, Wuxi Bank’s total assets were 280.627 billion yuan, up by 23.826 billion yuan from the beginning of the year, an increase of 9.28%; total deposits were 235.621 billion yuan, a net increase of 23.140 billion yuan from the beginning of the year, an increase of 10.89%; total loans were 170.629 billion yuan, a net increase of 14.009 billion yuan from the beginning of the year, an increase of 8.94%; operating income was 4.819 billion yuan, up 1.98% year on year, and net profit attributable to shareholders of the listed company was 2.309 billion yuan, up 2.53% year on year; the non-performing loan ratio was 0.77%, down 0.01 percentage points from the beginning of the year.

On the surface, Wuxi Bank achieved net profit of 2.309 billion yuan, up 2.53% from the previous year, meeting the goal of “steady growth,” but concerns about the quality of earnings are lurking beneath the surface.

Judging from Wuxi Bank’s provision coverage ratio, although it remains at a high level of 414.91%, it decreased by 42.69 percentage points compared with the previous year. Compared with 522.57% in 2023, it has fallen dramatically by 107.66 percentage points. Despite a slight year-on-year decline in the non-performing loan ratio, Wuxi Bank’s provision coverage ratio has dropped sharply, which makes it highly likely that provisions were used to adjust profits.

In addition, the bank’s average return on assets fell again by 0.06 percentage points to 1.16%. The fundamental reason lies in the continuing decline of its net interest margin and net interest spread. As of the end of 2025, its net interest margin and net interest spread were 1.16% and 1.35%, respectively, both below the average level of China’s commercial banks.

The continued narrowing of the net interest margin is the core reason: under the dual squeeze of falling loan yields and rigid deposit costs, it directly led to a 0.21% growth rate in net interest income, which is far lower than the 9.28% asset growth rate. It is worth noting that as of the end of 2025, the bank’s share of time deposits was 68.39%, which directly pushed up the cost of interest-bearing liabilities.

Within its non-interest net income mix, investment income reached 1.253 billion yuan, accounting for 91.5%, while fee and commission income accounted for only 1.5%. Given the significant volatility in capital markets in recent years, this kind of income structure is likely to bring about unforeseeable consequences.

In an environment where major banks’ fee income exceeds 30% of non-interest income, Wuxi Bank’s lack of intermediary business also makes it difficult to hedge the downward pressure on interest margins.

According to a report recently released by the Jiangsu Securities Regulatory Bureau, in its inspection of Wuxi Bank, the Bureau found that the bank had problems in four areas in its fund sales business—“system development, business compliance, internal control and risk management, and information reporting,” including but not limited to “relevant systems for fund sales business not being updated in a timely manner based on actual business operations; certain fund sales outlets not having set up and kept the business licenses for fund sales; compliance risk control personnel not conducting compliance reviews of newly introduced agency products and the management institutions for those products,” and so on.

Due to multiple compliance violations, the Jiangsu Securities Regulatory Bureau took regulatory action against Wuxi Bank by issuing a warning letter.

As early as April 2018, the Jiangsu Securities Regulatory Bureau released information and conducted an inspection of Wuxi Bank’s fund sales business, finding multiple violations, including the failure to establish a fund product risk assessment system, and the fact that the evaluation methods and their explanations were not disclosed to fund investors. As a result, the bank was ordered to make corrections, submit a written rectification report within one month.

Several years later, violations in the fund sales business reappeared. This not only exposed shortcomings in the bank’s internal control and long-term compliance mechanism building, but also indirectly confirmed that its fund sales operations still need substantial improvement in terms of compliance management and risk prevention.

The situation demonstrated by Wuxi Bank in 2025 more closely represents a snapshot of how Chinese small and medium-sized banks “seek survival in the gaps and pursue development through transformation.” Its experience shows that the core competitiveness of regional legal-person banks lies in “deep regional cultivation + flexible mechanisms.” But to break through amid industry reshuffling, they must move beyond “scale dependence” and toward “quality-driven” development. This means optimizing business structures through inclusive finance and fintech, improving the level of refinement in interest margin management and cost control, and exploring diversified sources of income under the premise that risks are controllable.

Its future highlights will depend on whether its retail business can stop the decline and rebound, whether digital investment can be converted into an incremental increase in revenue, and whether its subsidiaries can turn losses into profits. If breakthroughs can be achieved in these areas, this “small but excellent” regional bank may become another successful example of transformation for small and medium-sized banks.