Event: On August 15, Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd. released its 2025 semi-annual report, achieving operating revenue of 2.4 billion yuan in the first half, up 10.5% year-on-year, and net profit attributable to shareholders of 850 million yuan, up 16.6% year-on-year. The weighted average return on equity (ROAE) was 8.98%, up 0.5 percentage points year-on-year.
Review: Strong non-interest income growth drives revenue acceleration, with profitability returning to double-digit growth. Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd.'s revenue, pre-provision profit, and net profit attributable to shareholders grew by 10.5%, 14.7%, and 16.6% year-on-year respectively in the first half of 2025, with growth rates improving by 4.4, 6.3, and 14.4 percentage points respectively compared to Q1. Net interest income and non-interest income grew by -0.2% and 30.3% respectively in the first half, with growth rates improving by 1.2 and 9.4 percentage points respectively compared to Q1. The cost-to-income ratio and credit impairment losses to operating revenue were 23.7% and 36.1% respectively in the first half, down 2.7 and 5.1 percentage points year-on-year.
Breaking down profit growth structure: Scale and non-interest income were the main contributors, driving performance growth by 12.7 and 31.8 percentage points respectively. From a marginal perspective, accelerated non-interest income growth enhanced its contribution to performance, while narrowing net interest margin decline and slower provision charges reduced their drag on profit growth.
Corporate loan growth stabilizes balance sheet expansion pace, maintaining high investment intensity in key sectors. At the end of Q2 2025, Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd.'s interest-earning assets (excluding trading financial assets) and loans grew by 3.2% and 7% year-on-year respectively, down 7.3 and 0.2 percentage points from the end of Q1. In terms of loans, new loans totaled 7.3 billion yuan in the first half, 200 million yuan less than the same period last year; Q2 alone saw 1.8 billion yuan in new loans, 100 million yuan less year-on-year, with loans accounting for 72% of interest-earning assets, up 3.6 percentage points from the end of Q1.
Structurally, corporate, retail, and bill loans increased by 8.3 billion yuan, -100 million yuan, and -800 million yuan respectively in the first half, representing increases of 3.0 billion yuan, decreases of 500 million yuan, and increases of 3.7 billion yuan compared to the same period last year. The reduction in low-yield assets like bills optimized the loan structure. Q2 alone saw 3.4 billion yuan in new corporate loans, 3.8 billion yuan more than the same period last year, providing strong support for asset expansion.
In terms of allocation, investments were mainly concentrated in manufacturing, wholesale and retail, and construction sectors, with a focus on small and micro enterprises. Inclusive agriculture and inclusive small and micro enterprise loans increased by 3.3 billion yuan and 3.7 billion yuan respectively in the first half, growing 9.6% and 11.6% from the beginning of the year, higher than overall loan growth. On the retail side, business loans increased by 400 million yuan in the first half, 800 million yuan more than the same period last year, providing effective support for retail credit growth. Non-housing consumer loans and credit card lending were relatively weak, as long-term variables such as employment and income await improvement, with insufficient balance sheet expansion capacity and willingness. The "production-consumption" internal circulation still needs to be enhanced, leading to weakened related financing demand.
Deposit growth remains stable with a slowing trend in term deposit conversion. At the end of Q2 2025, Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd.'s interest-bearing liabilities and deposits grew by 11.8% and 9.6% year-on-year respectively, changing by +0.4 and -0.1 percentage points from the end of Q1. New deposits totaled 10.4 billion yuan in the first half, 1.6 billion yuan more than the same period last year, with deposits accounting for 88% of interest-bearing liabilities at the end of Q2, down 0.1 percentage points from the end of Q1. By maturity, term and demand deposits increased by 11.2 billion yuan and 2.2 billion yuan respectively in the first half, 3.2 billion yuan and 3.4 billion yuan more than the same period last year. Term deposits accounted for 66% at the end of Q2, down 0.8 percentage points from the end of Q1, showing a slowing trend in deposit term conversion.
Net interest margin (NIM) widened against the trend by 3 basis points to 1.54% in the first half compared to Q1. On the asset side, the yields on interest-earning assets and loans were 3.02% and 3.62% respectively in the first half, down 42 and 28 basis points from 2024. Loan pricing faced pressure in the first half due to continuous LPR cuts, rolling repricing at the beginning of the year, insufficient effective demand, and intensified peer competition. On the liability side, the costs of interest-bearing liabilities and deposits were 1.65% and 1.62% respectively in the first half, down 24 and 23 basis points from 2024. On one hand, as term deposits mature and are repriced, cost control benefits will continue to be released; on the other hand, the company's liability maturity structure continues to adjust, with a slowing trend in deposit term conversion. Calculations show that the yields on interest-earning assets and costs of interest-bearing liabilities were 3.16% and 1.63% respectively in the first half, up 2 basis points and down 2 basis points from Q1, with the net interest margin widening against the trend in the first half compared to Q1.
Non-interest income growth accelerates with investment income as the main contributor. Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd.'s non-interest income reached 1.0 billion yuan in the first half (YoY +30%), with growth accelerating by 9.4 percentage points from Q1, accounting for 41% of operating revenue, up 3.3 percentage points from Q1. Specifically, (1) Fee and commission income was 50 million yuan (YoY -35%), accounting for 5% of non-interest income, down 2.2 percentage points from Q1. (2) Net other non-interest income was 940 million yuan (YoY +38%), of which investment income was 880 million yuan in the first half (YoY +81%), accounting for 89% of non-interest income, down 8 percentage points from Q1 2025.
Non-performing loan ratio remains low with stable risk coverage capacity. At the end of Q2 2025, Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd.'s NPL ratio and special mention loan ratio were 0.86% and 1.1% respectively, unchanged and up 7 basis points from the end of Q1. The NPL ratio remained low while the special mention ratio rose slightly. The overdue loan ratio was 1.06% at quarter-end, down 29 basis points from the beginning of the year; the ratio of overdue to NPLs was 124.5%, down 32 percentage points from the beginning of the year, with forward-looking indicators performing well. The company's new NPLs and write-offs totaled 810 million yuan and 750 million yuan respectively in the first half, up 210 million yuan and 230 million yuan year-on-year, with both new NPL formation and write-off intensity increasing. In terms of provisions, the loan loss provision ratio and provision coverage ratio were 3.26% and 381.2% respectively at the end of Q2, up 0.26 and 31 percentage points from the end of Q1. While asset quality remains stable, the company maintains high provision levels, demonstrating strong risk coverage capacity.
Capital adequacy ratios maintain thick safety margins. At the end of Q2 2025, the company's Core Tier 1/Tier 1/Total capital adequacy ratios were 13.7%, 13.8%, and 14.9% respectively, up 1, 2, and 2 basis points from the end of Q1. Risk-weighted assets grew by 11.4% at the end of Q2, down 1.5 percentage points from the end of Q1, with slightly slower RWA growth reducing capital consumption intensity. In 2024, the company's dividend payout ratio was 24.2%, down 0.6 percentage points from 2023. With profitability returning to double-digit growth and a slightly lower dividend ratio, internal capital supplementation capacity is strong, maintaining thick capital adequacy safety margins.
Earnings forecast, valuation, and rating. Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd. has deep roots in the local market with distinct personal and geographical advantages. Its private shareholder background combined with primary legal entity status provides significant assistance in acquiring and retaining G+B clients. In recent years, the company has promoted its inclusive retail transformation strategy, focusing on the "three pillars" of inclusive finance, small and micro enterprises, and retail banking. Since 2016, the company has actively expanded into surrounding markets, establishing three branches in Changzhou, Wuxi, and Suzhou, replicating its local small and micro business model. The company continues to reduce historical burdens, with new risks under control, low NPL generation pressure, thick capital safety margins, and broad future balance sheet expansion space.
Based on the company's 2025 semi-annual report, we adjust our EPS forecasts for Jiangsu Jiangyin Rural Commercial Bank Co.,Ltd. for 2025-2027 to 0.91, 0.98, and 1.05 yuan (up 5.5%, 10.6%, and 15.2% from previous estimates). At current stock prices, the corresponding PB valuations are 0.56, 0.51, and 0.47 times, with PE valuations of 5.1, 4.7, and 4.42 times respectively. We maintain a "Buy" rating.
Risk warnings: Economic recovery progress may fall short of expectations, intensified customer base expansion by state-owned banks, and small and micro loan rate declines exceeding expectations.
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