New team’s debut! Live coverage of Zhejiang Commercial Bank’s earnings conference: no quick profits, using three certainties to navigate the cycle

Ask AI · How can the new leadership team use three major certainties to respond to industry challenges?

This article source: Times Weekly Reporter: Huang Yukun

“Under the industry environment where interest rate spreads continue to narrow, industry competition intensifies, and risk prevention is under pressure, we do not pursue scale obsession blindly, do not overly focus on short-term performance or quick profits, and do not follow the old path of big players. Instead, we adhere to long-termism, strengthen fundamentals, adjust structure, enhance compliance, and control risks, achieving overall stable performance.” On March 31, Chen Haiqiang, Chairman of Zhejiang Commercial Bank, stated at the bank’s 2025 annual performance briefing.

This is the first time Chen Haiqiang and Lu Linhua appeared together at an earnings conference and made public statements since Chen officially took office as Chairman of Zhejiang Commercial Bank and Lu was appointed (intended) as the bank’s President.

By 2025, Zhejiang Commercial Bank completed a new round of senior management changes, with a clear trend of youthfulness, with several senior executives born in the 1970s. Chen Haiqiang said at the performance meeting that the new leadership team generally exhibits characteristics of professional deep cultivation, reasonable structure, and youthful vigor, with solid professional expertise, rich experience in commercial banking management, and a passion and resilience for entrepreneurship.

According to Zhejiang Commercial Bank’s recently released 2025 annual report, as of the end of 2025, the bank’s total assets exceeded 3.4 trillion yuan. Although operating income and net profit attributable to the parent declined that year, the bank continued to maintain a dividend payout ratio of over 30%, with a cash dividend of 0.131 yuan per share, and planned cash dividends of 3.598 billion yuan.

Chen Haiqiang emphasized in the annual report speech that Zhejiang Commercial Bank will always aim for the vision of “a first-class commercial bank,” adhere to management-led development, service-oriented excellence, technological empowerment, and talent-driven growth, and be a steadfast long-termist.

Zhejiang Commercial Bank 2025 Annual Performance Conference. Photo by Times Weekly Reporter

Talking about performance: Strive to stabilize net interest margin and continue to “live frugally”

In 2025, Zhejiang Commercial Bank’s total assets reached 3,481.092 billion yuan, an increase of 155.553 billion yuan or 4.68% from the end of the previous year. The bank achieved operating income of 62.514 billion yuan and net profit attributable to the parent of 12.931 billion yuan that year. In terms of revenue structure, net interest income and non-interest income were 44.459 billion yuan and 18.055 billion yuan, respectively.

Regarding the 2025 performance, the management of Zhejiang Commercial Bank stated that the overall results met the targets. Lu Linhua explained that from the perspective of interest income, the current economy remains in a weak recovery phase, with effective credit demand gradually recovering, and the trend of narrowing net interest spreads continuing; from non-interest income, 2025 saw wide fluctuations in the bond market, with increased volatility affecting the bank’s trading financial assets income.

In 2025, Zhejiang Commercial Bank’s net interest margin and net interest yield were 1.46% and 1.60%, respectively, down 6 and 11 basis points from the previous year. The bank stated in its annual report that it continued to promote reducing corporate financing costs, with the average yield on interest-earning assets decreasing by 46 basis points year-on-year. To actively respond to the pressure of narrowing spreads in a low-interest-rate environment, the bank improved liability quality management, with the average interest expense rate decreasing by 40 basis points compared to last year.

Lu Linhua said that in 2025, the bank’s interest spread significantly narrowed. Currently, each bank’s asset-liability structure and re-pricing cycle differ, resulting in different net interest margin performance and operating patterns. In the short term, Zhejiang Commercial Bank’s net interest margin still faces certain pressure, but based on the measures already taken and future plans, he believes that the net interest margin in the banking industry can gradually stabilize.

For the 2026 business outlook, Lu Linhua said that Zhejiang Commercial Bank will continue to focus heavily on developing assets and liabilities to stabilize net interest margin, while also increasing fee income to ensure steady and sustainable revenue. Additionally, the bank will continue to push forward comprehensive cost control, live frugally, cut unnecessary costs, and ensure profitability.

“We are currently implementing a three-year fee income enhancement plan, aiming to change the past reliance on asset deployment and credit expansion for fee growth, and instead develop light-asset, high-loyalty fee income such as settlement and agency sales. We will strengthen the linkage between income and expenditure, carefully calculate each fee income’s associated costs, and optimize the structure,” Lu Linhua said.

The annual report shows that in 2025, Zhejiang Commercial Bank’s net fee and commission income was 3.752 billion yuan. Among them, agency and entrusted business fee income was 2.791 billion yuan, an increase of 526 million yuan from the previous year, mainly due to growth in agency sales income.

In terms of asset custody, as of the end of 2025, the bank’s custody scale was 2.72 trillion yuan, an increase of 209.836 billion yuan or 8.35% from the beginning of the year. During the reporting period, custody business income reached 662 million yuan, a year-on-year increase of 3.92%. The scale of public fund custody was 581.911 billion yuan, an increase of 58.143 billion yuan or 11.10% from the beginning of the year. Public fund custody income was 389 million yuan, up 13.25% year-on-year, ranking third among joint-stock banks.

Discussing strategy: Deepening in Zhejiang, serving over 6,000 provincial sci-tech innovation enterprises

As a nationwide joint-stock bank headquartered in Zhejiang, Zhejiang Commercial Bank launched a new round of deepening efforts in Zhejiang in 2025.

Luo Feng, Vice President of Zhejiang Commercial Bank, introduced at the performance conference that two-thirds of the new credit resources in 2025 were allocated within Zhejiang, aligning with the bank’s low-risk, average-yield risk appetite. The province’s deposit and loan growth led among joint-stock banks, with significantly reduced interest costs and better non-performing loan ratios than the provincial average.

Data shows that by the end of 2025, Zhejiang Commercial Bank’s total financing services in Zhejiang reached 1.1755 trillion yuan, an increase of 155 billion yuan from the start of the year, with 10.6 billion yuan in new financing for major projects. The province’s deposit and loan balances were 633.3 billion yuan and 661.4 billion yuan, respectively, with increases of 68.7 billion yuan and 46.5 billion yuan from the beginning of the year, leading among joint-stock banks in growth. The number of corporate clients, micro-enterprise clients, and retail clients in the province reached 65,000, 83,000, and 5.23 million, respectively, with growth rates of 21.35%, 30.02%, and 31.12% from the start of the year.

“Relying on a talent-based bank as the foundation of our sci-tech finance system, we have served over 6,000 sci-tech enterprises in the province and helped 42 of them go public on the A-share market,” Luo Feng said. Looking ahead, Zhejiang Commercial Bank will follow the long-term approach, focusing on serving the government, Zhejiang merchants, and local residents, creating a replicable and scalable differentiated service model. The bank will actively integrate into Zhejiang’s overall development, prioritize serving Zhejiang merchants, and also improve wealth management for residents, building a full lifecycle customer service system and data platform within the province to enhance residents’ property income.

Chen Haiqiang further emphasized that Zhejiang Commercial Bank will remain committed to its Zhejiang-deepening strategy, leverage Zhejiang Commercial Bank’s license advantages as a national joint-stock bank, as well as its own strengths in distinctive businesses, build its headquarters well, deepen and fully penetrate the local market within the province, and continuously enhance its influence and competitiveness in Zhejiang Province.

Discussing development: First time included as a systemically important bank, navigating cycles with three certainties

In February this year, the People’s Bank of China and the China Banking and Insurance Regulatory Commission jointly released the 2025 assessment results for systemically important banks in China, recognizing 21 domestic systemically important banks, with Zhejiang Commercial Bank being included for the first time.

“This inclusion is not only a recognition of Zhejiang Commercial Bank’s comprehensive strength and core competitiveness by regulators but also sets higher standards and stricter requirements for our responsibility, compliance, and operation,” Chen Haiqiang said.

Chen further stated that the new leadership team will lead Zhejiang Commercial Bank through cycles with three certainties. First is the certainty of continuous marginal improvement in asset quality, with risk management positioned as the lifeline of the bank’s operations, adhering to risk-first and compliance-based principles, continuously optimizing the comprehensive risk management system, and establishing an independent, balanced, professional risk management mechanism to achieve long-term value compounding with low risk and steady returns.

Second is the certainty of growth momentum, shifting from scale-driven to value-driven development, moving away from simply accumulating personnel, capital, and branches, and instead emphasizing management system optimization, strengthening professional competence, leveraging technological empowerment, and improving overall labor productivity to achieve sustainable internal growth.

Third is the certainty of enhanced capital returns. Zhejiang Commercial Bank will continue to expand and solidify its customer base, optimize asset-liability allocation, and through improved asset quality and transformation of growth drivers, strive to steadily increase ROE to the industry average, boosting market confidence.