Huaxia Bank "Handed in the Exam": Last year's revenue and net profit both declined | Reading financial reports to "taste the financial flavor"

Editor’s Note: Quarterly reports from publicly listed financial institutions have kicked off as scheduled. Over the past year, the external environment has been complicated and challenging. Financial institutions have stepped up efforts to better serve the real economy, reduced fees and passed benefits on to the public, and navigated through the cycle despite waves and headwinds—enduring a test of resilience that was exceptionally demanding. This hard-won “report card”—just how good is it in substance? Join reporters from the Shanghai Securities News to open the annual report and read the “financial flavor.”

China Huaxia Bank has recently submitted its “answers” for 2025 operating results:

Operating income was 91.91B yuan, down 5.39% year on year; attributable net profit was 27.2 billion yuan, down 1.72% year on year. The year-over-year growth rate was negative for the first time in five years.

Total loans were 2.57 trillion yuan, up 8.47% from the end of the prior year; total deposits were 2.38 trillion yuan, up 10.71% from the end of the prior year. Both the increment and growth rate of deposits and loans reached new highs in the past five years.

Since 2024, China Huaxia Bank’s management has undergone wide-ranging changes. With the selection of Yang Shujian as chairman of China Huaxia Bank in March 2025, the bank has put in place a relatively stable new management team.

Mixed results in operating performance, with “double excellence” in technology and green finance

A closer look at China Huaxia Bank’s 2025 report card shows mixed outcomes.

Good— the bank’s full-year operating income decline rate narrowed by 3.40 percentage points compared with the first three quarters; its attributable net profit decline rate narrowed by 1.14 percentage points compared with the first three quarters. The net interest margin (NIM) maintained resilience; the non-performing loan ratio has declined for five consecutive years; and both the increment and growth rate of deposits and loans hit new highs in the past five years.

Bad— the bank saw double declines in operating income and attributable net profit; non-interest net income fell; the non-performing loan ratio still remains at a high level among joint-stock banks; and the provision coverage ratio declined.

Turning to China Huaxia’s 2025 annual report, multiple sections mention “double excellence” in technology finance and green finance. Compared with the 2024 annual report, it is evident that the bank shifted from broadly emphasizing the “five major areas of financial services for real economic needs” to highlighting its “double excellence” in technology and green finance.

As of the end of 2025, the bank’s total loan balance was 2.57 trillion yuan, up 8.47% year over year.

In terms of corporate business, China Huaxia Bank’s loan growth rate was strong. As of the end of 2025, the bank’s outstanding balance of corporate loans was approximately 1.77 trillion yuan, up 12.74% from the end of the prior year; the share was 68.95%, up 2.67 percentage points from the end of the prior year. The corporate non-performing loan ratio was 1.42%, down 0.17 percentage points from the end of the prior year.

The annual report states that its “double excellence” in technology and green finance has become even more prominent: the loan balances for technology finance and green finance grew by 53.74% and 30.99%, respectively, from the end of the prior year.

Regarding asset quality, at the end of the reporting period, China Huaxia Bank faced declines in both the balance and share of personal loans, with the non-performing loan ratio rising. As of the end of 2025, the bank’s personal loan balance was 25.7k yuan, down 3.2% from the end of the prior year; its share was 27.22%, down 3.29 percentage points from the end of the prior year; and the personal non-performing loan ratio was 2.11%, up 0.31 percentage points from the end of the prior year.

Net interest margin maintained resilience

Looking at the revenue structure, the bank’s last year’s interest net income stayed in positive growth. In 2025, the bank’s net interest income was 23.8k yuan, up 1.43%; it accounted for 68.49% of operating income.

This is mainly attributable to eased pressure on the net interest margin. During the reporting period, the bank’s net interest margin maintained resilience, down 0.03 percentage points year over year to 1.56%, placing it in the mid-range among joint-stock banks.

Last year, China Huaxia Bank effectively controlled its funding costs. As of the end of 2025, the bank’s average balance of interest-bearing liabilities was 4.17 trillion yuan, up 6.1%; the bank’s average interest rate on interest-bearing liabilities fell by 0.42 percentage points to 1.73%.

At the corporate performance briefing, Qugang Qu, president of China Huaxia Bank, said that looking ahead to 2026, considering both the internal and external environment, the bank expects newly originated loan rates to continue trending downward. As time deposits gradually reprice, there will still be room for funding costs to decline. The bank expects that there will remain downward pressure on the full-year net interest spread, though the magnitude is expected to slow down.

Non-interest income drags on performance

Against the backdrop of ongoing narrowing of the net interest margin and pressure on interest income, non-interest businesses have become an important source of banks’ earnings growth.

However, non-interest business was a key factor that dragged down China Huaxia Bank’s operating income last year.

China Huaxia Bank’s 2025 non-interest net income was 25.7k yuan, down 17.44% year over year; it accounted for 31.51% of operating income, down 4.60 percentage points year over year.

From the breakdown data, the bank’s other non-interest net income decreased 21.09% year over year to 17.7k yuan. An analyst told reporters that this was mainly because the net profit/loss from changes in fair value was -698.77B yuan, down 144.68% year over year. The annual report explains this as: changes in fair value driven by fluctuations in the capital market.

Regarding the high volatility in fair value observed at multiple joint-stock banks, Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that banks should improve classification accounting and stop-profit/stop-loss mechanisms, reasonably manage the timing of bond trading, and prevent large fair value swings triggered by market adjustments.

In terms of fee-based business income, the bank maintained slight growth. In 2025, China Huaxia Bank’s net fee and commission income increased 2.44% year over year to 62.95B yuan.

Improving asset quality

In terms of asset quality, the bank has shown some improvement, but the non-performing loan ratio is still at a high level among joint-stock banks. As of the end of 2025, the bank’s non-performing loan ratio was 1.55%, down 0.05 percentage points from the end of the prior year, achieving five consecutive years of decline. However, among joint-stock banks, the non-performing loan ratio is still high.

Attention should be paid to the risk resilience capability. As of the end of 2025, the bank’s balance of non-performing loans was 41.7k yuan, up 5.2% from the end of the prior year; the proportion of loans classified as under watch increased by 0.09 percentage points from the end of the prior year to 2.67%. The provision coverage ratio was 143.30%, down sharply by 18.59 percentage points from the end of the prior year.

Analysts said that the bank’s provision coverage ratio is at a low level among joint-stock banks, meaning the “buffer cushion” for non-performing loans in the future is relatively thin. At the same time, with the proportion of loans under watch rising—these loans are a “reservoir” for potential non-performing loans—the pressure for the generation of future non-performing loans will still exist.

In terms of capital adequacy, as of the end of the reporting period, China Huaxia Bank’s core tier-one capital adequacy ratio was 9.38%, its tier-one capital adequacy ratio was 11.75%, and its capital adequacy ratio was 13.16%.