Recently, HARBIN BANK (06138.HK), the first listed commercial bank in Northeast China, has performed well in the capital market. Over the past 10 trading days, its stock price has risen by more than 10%, ranking among the top performers among mainland banks listed on the Hong Kong Stock Exchange.
HARBIN BANK's strong stock performance can be attributed to two factors: on one hand, market fluctuations and the continued attractiveness of high-dividend assets to investors; on the other hand, the bank's overall solid interim results.
In the first half of 2025, HARBIN BANK's total assets reached 927.528 billion yuan, up 1.23% year-on-year; revenue grew 2.59% year-on-year, and net profit attributable to shareholders increased 19.96% year-on-year. According to Wind data, HARBIN BANK's net profit growth rate ranked first among mainland banks listed in Hong Kong in the first half of 2025.
However, behind HARBIN BANK's earnings growth, there are still concerns worth noting. The bank's loan NPL rate is a market focus. While showing a downward trend, it remains at industry highs and is the highest among listed city commercial banks.
Additionally, HARBIN BANK's capital adequacy ratio has declined, putting pressure on capital adequacy. Under capital adequacy pressure, HARBIN BANK has not paid cash dividends for consecutive years, earning criticism from investors who call it an "iron rooster."
In November 2024, HARBIN BANK's chairman position changed. Deng Xinquan resigned from his positions as executive director and chairman due to approaching retirement age, while the board elected Yao Chunhe as chairman. Yao Chunhe's term is effective from the date of financial regulatory approval, and until then, Deng Xinquan continues to fulfill chairman duties.
Currently, 10 months have passed, and Yao Chunhe's qualification has not yet been approved.
However, judging from HARBIN BANK's current development, Yao Chunhe will face significant challenges when he officially takes office.
**Earnings Growth and Profit Recovery: Investment Income is Key**
In the 2025 interim report, HARBIN BANK achieved revenue of 7.386 billion yuan, up 2.59% year-on-year, and net profit attributable to shareholders of 915 million yuan, up 19.96% year-on-year.
The 19.96% net profit growth rate is the most impressive aspect of HARBIN BANK's interim report. Wind data shows that among 32 mainland banks currently listed in Hong Kong, HARBIN BANK ranks first in net profit growth among the 32 banks that have disclosed interim results. Looking at city commercial banks nationwide, HARBIN BANK's net profit growth rate is also in the top 10.
HARBIN BANK listed on the Hong Kong Stock Exchange in 2014, becoming the first listed commercial bank in Northeast China. From 2014 to 2019, HARBIN BANK's performance remained generally stable. In 2019, HARBIN BANK's revenue reached 15.124 billion yuan, the largest revenue scale since listing, while net profit attributable to shareholders fell 35% to 3.558 billion yuan compared to 2018. Despite the decline in net profit, it still exceeded 3 billion yuan.
2020 was a turning point for HARBIN BANK's performance. That year, the company's revenue fell 3.43%, while net profit attributable to shareholders plunged 79% to 746 million yuan. In 2021, HARBIN BANK's revenue and net profit attributable to shareholders continued to decline, with net profit falling to less than 300 million yuan.
Starting in 2022, HARBIN BANK's performance gradually returned to normal track. That year, HARBIN BANK's revenue grew 4.47%, and net profit attributable to shareholders increased by more than 100%. From 2023 to 2024, HARBIN BANK's performance continued the growth trend.
In the first half of 2025, HARBIN BANK's revenue and net profit attributable to shareholders continued to grow. With revenue and net profit maintaining growth trends, by the end of the first half of 2025, HARBIN BANK's ROA reached 0.22% and ROE reached 2.07%, up 0.02 and 0.57 percentage points respectively compared to the same period in 2024. HARBIN BANK's profitability is recovering.
Observing HARBIN BANK's earnings growth and profit recovery, investment income has become a key factor.
By the end of the first half of 2025, HARBIN BANK's net interest margin narrowed to 1.10%, causing net interest income to fall 11.37% year-on-year to 4.413 billion yuan. With declining net interest income, non-interest net income drove revenue growth, particularly investment income.
The interim report shows that in the first half of 2025, HARBIN BANK's financial investment income reached 2.305 billion yuan, up 1.64 billion yuan year-on-year, an increase of 246.4%, accounting for more than 30% of total revenue.
By the end of the first half of 2025, HARBIN BANK's net investment securities and other financial assets reached 387.329 billion yuan, up 9.528 billion yuan from the end of 2024, accounting for 41.8% of total assets, exceeding the proportion of net customer loans and advances.
However, investment income, particularly from financial assets, is subject to market environment influences and is highly volatile. From 2020 to 2024, HARBIN BANK's financial investment income growth rates were -49.83%, 13.9%, 68.5%, -36.4%, and 474.5% respectively, fluctuating up and down. To maintain stable performance, HARBIN BANK needs to strengthen investment while also deepening traditional credit business.
**Asset Quality Improvement, But NPL Rate Remains High, Personal Loan NPL Rate Rising**
Asset quality has always been the most watched aspect of commercial banks, especially for HARBIN BANK.
HARBIN BANK accumulated historical burdens during past expansion and development, forming large amounts of non-performing assets, resulting in a high NPL rate. In 2020, HARBIN BANK's NPL rate reached 2.97%.
To reduce the NPL rate and optimize asset quality, HARBIN BANK has accelerated NPL disposal in recent years. In 2024, HARBIN BANK issued two announcements on NPL disposal, transferring and disposing of more than 1 billion yuan in total.
Along with HARBIN BANK's NPL disposal, the bank's NPL rate began to decline. From 2021 to 2024, the company's NPL rates were 2.88%, 2.89%, 2.87%, and 2.84% respectively. In the 2025 interim report, HARBIN BANK's NPL rate was 2.83%, down 0.01 percentage points from the end of 2024.
From recent trends, HARBIN BANK's asset quality has improved. However, HARBIN BANK's NPL rate remains at industry highs. According to Wind data statistics, HARBIN BANK's NPL rate ranks first among listed city commercial banks (A+H).
By segment, HARBIN BANK's corporate NPL rate is declining while personal loan NPL rate is rising. By the end of the first half of 2025, HARBIN BANK's corporate loan NPL rate was 2.23%, down 0.16 percentage points from the end of 2024; personal loan NPL rate was 5.11%, up 0.14 percentage points from the end of 2024.
Why has HARBIN BANK's loan NPL rate remained high?
In July 2025, United Credit Ratings rated HARBIN BANK's perpetual bonds from 2021 and 2022, giving HARBIN BANK a AAA sovereign credit rating and maintaining AA+ ratings for the company's two perpetual bonds from 2021 and the first perpetual bond from 2022.
In the rating report, United Credit Ratings pointed out that HARBIN BANK has a high proportion of overdue loans and significant deviation in five-category loan classification, with some large risk exposure indicators exceeding regulatory limits, facing significant downward pressure on credit asset quality.
Loan classification deviation is a reverse indicator measuring the accuracy of financial institutions' loan classification. When the ratio of loans overdue for more than 90 days to NPLs exceeds 100%, it indicates classification inaccuracy and significant potential risks.
United Credit Ratings' rating report pointed out that at the end of 2024, HARBIN BANK's ratio of loans overdue for more than 90 days to NPLs was 317.45%, with loan classification deviation exceeding standards.
The rating report stated that the excessive deviation is due to the bank's temporary non-inclusion of some loans overdue for more than 90 days but with sufficient collateral, pledges, state enterprise guarantees, and state-owned guarantee company collateral or guarantee capabilities into NPLs, indicating significant future downward pressure on credit asset quality.
By the end of the first half of 2025, HARBIN BANK's NPL balance was 11.2697 billion yuan, and loans overdue for more than 90 days amounted to 35.706 billion yuan. Calculations show that HARBIN BANK's NPL classification deviation still exceeded 300% by the end of the first half of 2025, remaining above standards.
This shows that while HARBIN BANK's asset quality has improved, it still needs enhancement and has significant room for progress.
**Capital Adequacy Under Pressure, No Dividends for 5.5 Consecutive Years**
Listed banks are typically high-dividend, high-yield investment targets for investors, often called "cash cows" due to stable cash dividends.
However, HARBIN BANK is called an "iron rooster" by investors, as the bank has not paid dividends for more than 5 consecutive years since listing.
Wind data shows that since listing on the Hong Kong Stock Exchange in 2014, HARBIN BANK has paid dividends 4 times: approximately 1.133 billion yuan for 2014, approximately 1.177 billion yuan for 2015, approximately 550 million yuan for 2017, and approximately 1.1 billion yuan for 2019.
2019 was HARBIN BANK's last cash dividend since listing. From 2020 to 2024, HARBIN BANK has not paid dividends. In the 2025 interim report, HARBIN BANK stated it would not pay dividends.
According to Wind data statistics, from 2006 to the end of the first half of 2025, over 19.5 years, HARBIN BANK paid dividends 5 times, including once before listing, with total dividend payments of 4.384 billion yuan. During this period, HARBIN BANK earned profits of 40.943 billion yuan, with an average dividend payout ratio of only 10.71%.
Compared with other city commercial banks listed in Hong Kong, from 2006 to the first half of 2025, Bank of Qingdao's cumulative average dividend payout ratio was 26.69%, Huishang Bank's was 12.55%, Bank of Chongqing's was 20.91%, and Bank of Guizhou's was 16.77%. HARBIN BANK's ratio is relatively low.
HARBIN BANK has achieved earnings growth and enhanced profitability in recent years, so why doesn't it pay dividends?
Observations show that HARBIN BANK's capital adequacy has been under relative pressure in recent years. From 2022 to 2024, HARBIN BANK's capital adequacy ratios were 11.91%, 13.71%, and 13.61% respectively; Tier 1 capital adequacy ratios were 10.69%, 12.48%, and 12.37% respectively; Core Tier 1 capital adequacy ratios were 8.64%, 8.69%, and 8.68% respectively.
In the first half of 2025, HARBIN BANK's capital adequacy ratio, Tier 1 capital adequacy ratio, and Core Tier 1 capital adequacy ratio were 13.47%, 12.23%, and 8.52% respectively, all declining to varying degrees from the end of 2024.
Banks need to consume significant capital during continuous expansion, and capital adequacy is crucial for bank development quality. As HARBIN BANK continues to expand its balance sheet, it needs continuous capital supplementation.
HARBIN BANK's capital supplementation channels are relatively narrow. In 2021, HARBIN BANK issued two perpetual bonds totaling 10 billion yuan, and in 2022 issued 700 million yuan in perpetual bonds. Since then, it has not issued large-denomination bonds, mostly focusing on interbank certificates of deposit.
Moreover, HARBIN BANK's stock price in the Hong Kong market has been depressed for a long time, falling below HK$1. The Hong Kong stock market is dominated by institutional investors who focus more on value investing. While HARBIN BANK's performance has recovered and shown impressive results in the first half, its performance in other aspects has difficulty attracting value investors, adding difficulty to future external capital supplementation.
Facing this situation, HARBIN BANK may need to retain earnings and supplement capital through internal profit generation, thereby reducing or eliminating dividends. According to previous reports, market professionals have stated that given HARBIN BANK's high NPL ratio, retaining earnings is viewed as a key measure to consolidate the capital base and ensure future solvency.
Currently, HARBIN BANK is gradually moving toward stable earnings growth, but high NPL rates and capital adequacy pressure also pose challenges to its stable progress. How to balance its own development with investor dividends, how to control risks, reduce NPL rates, and improve risk resistance capabilities are areas where Yao Chunhe, who will officially assume the chairman position, needs to work harder.
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