Bank of Chengdu Co., Ltd. recently disclosed a bond issuance plan for 2026, proposing to issue up to RMB 7 billion in Tier 2 capital bonds, along with special financial bonds and ordinary financial bonds totaling no more than RMB 10 billion.
Tier 2 capital bonds are primarily used to supplement a bank's Tier 2 capital and improve its capital adequacy ratio. According to Bank of Chengdu's Q3 financial report, the bank maintained growth in both operating revenue and net profit in the first three quarters of the year. However, its core Tier 1 capital adequacy ratio dropped by 0.29 percentage points to 8.77% compared to the end of 2024.
On November 20, Bank of Chengdu explained that the decline in these indicators was mainly due to capital consumption resulting from increased credit expansion and efforts to enhance financial service efficiency. Moving forward, the bank will prioritize internal capital accumulation while also seeking external capital replenishment as needed to ensure robust support for business development.
This year has seen active issuance of capital replenishment tools by commercial banks. Wind data shows that as of November 20, the issuance scale of "Tier 2 and perpetual bonds" has approached RMB 1.4 trillion.
**RMB 7 Billion Capital Boost Plan** Bank of Chengdu recently announced that its board of directors has approved a bond issuance plan totaling up to RMB 17 billion, pending shareholder approval. The final issuance plan will be subject to regulatory approval.
The plan consists of two parts: 1. Up to RMB 7 billion (inclusive) in Tier 2 capital bonds with a 10-year term, featuring an option for early redemption by the issuer at the end of the fifth year. The specific issuance rate has yet to be disclosed. 2. Up to RMB 10 billion in special financial bonds and ordinary financial bonds, including RMB 3 billion in green financial bonds, RMB 3 billion in sci-tech innovation bonds, and RMB 4 billion in ordinary financial bonds.
Bank of Chengdu stated that the plan aligns with the current macroeconomic environment, regulatory requirements, and its own development strategy. The Tier 2 capital bonds will supplement Tier 2 capital and improve the capital adequacy ratio, while the special and ordinary financial bonds will enhance financial services in key areas such as technology innovation and green finance.
Data shows that from 2020 to 2024, Bank of Chengdu's core Tier 1 capital adequacy ratio fluctuated between 9.26% and 8.22%, rebounding to 9.06% in 2024. Similarly, its Tier 1 capital adequacy ratio and overall capital adequacy ratio also improved in 2024. The bank has historically relied on profit retention, capital replenishment bonds, and convertible bond conversions to bolster capital. In 2024, it issued RMB 14.9 billion in Tier 2 capital bonds and completed some convertible bond conversions.
As of the end of September 2025, Bank of Chengdu's core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio, and overall capital adequacy ratio stood at 8.77%, 10.52%, and 14.39%, respectively. The slight decline in the core Tier 1 ratio was attributed to increased capital usage from credit expansion and service improvements.
**Declining Net Interest Margin** Against the backdrop of narrowing net interest margins (NIM) across the banking sector, Bank of Chengdu's NIM dropped from 1.81% at the end of 2023 to 1.66% by the end of 2024.
Despite this, the bank has consistently achieved growth in both operating revenue and net profit, primarily driven by net interest income. From 2022 to 2024, operating revenue rose from RMB 20.24 billion to RMB 22.98 billion, while net profit increased from RMB 10.04 billion to RMB 12.86 billion. Net interest income accounted for over 80% of total revenue during this period.
Bank of Chengdu maintained revenue growth by significantly expanding its loan portfolio. At the end of 2024, its total loans and advances reached RMB 742.57 billion, up 18.67% year-on-year, with corporate loans contributing RMB 602.62 billion.
Analysts caution that heavy reliance on traditional interest income poses risks, including vulnerability to economic fluctuations, limited profitability sustainability, and constrained internal capital replenishment capacity.
Bank of Chengdu acknowledged the industry-wide challenge of narrowing NIM, noting that its NIM of 1.62% in H1 2025 was slightly better than peers. The bank emphasized the importance of managing liability costs and optimizing asset structure to stabilize NIM in the current low-interest-rate environment.
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