Bank of Guiyang (601997.SH) has drawn criticism from minority shareholders over its plan to acquire a loss-making rural bank.
On the evening of November 26, Bank of Guiyang disclosed the resolutions from its 2025 third extraordinary general meeting, where four major proposals were approved. However, the proposal to acquire Xifeng Development Rural Bank and establish branches faced opposition from 19.0713% of shareholders, with small shareholders (holding less than 5% stake) voting 27.2325% against the move.
The bank stated that the acquisition aligns with national strategies and policies to enhance regional financial services. However, Xifeng Development Rural Bank, in which Bank of Guiyang holds a 37.4% stake, reported a net loss of 3.3199 million yuan in the first half of 2025.
The skepticism from minority shareholders reflects broader concerns over Bank of Guiyang’s weak financial performance. In the first three quarters of 2025, the bank’s operating revenue declined 13.73% year-on-year to 9.435 billion yuan, while net profit attributable to shareholders dropped 1.39% to 3.915 billion yuan. Net interest income fell 12.3% to 7.606 billion yuan.
Adding to its challenges, Bank of Guiyang’s Qianxinan branch was fined 600,000 yuan on November 25 for inadequate loan due diligence, with two responsible individuals also penalized.
Despite the opposition, the acquisition proposal passed as a special resolution, requiring approval from two-thirds of voting shares. The bank plans to acquire Xifeng Development Rural Bank via cash payment based on an asset valuation as of March 31, 2025, and absorb its assets, liabilities, and operations before dissolving the rural bank.
Bank of Guiyang also holds stakes in other rural banks, including a 55.89% controlling stake in Guangyuan Guishang Rural Bank (which reported an 8 million yuan net loss in H1 2025) and a 20% stake in Huaxi Construction Rural Bank (with an 843,200 yuan net profit).
The bank’s sluggish revenue growth and narrowing interest margins have contributed to its financial strain. Its net interest margin fell to 1.57% in Q3 2025, down from 1.8% a year earlier. Non-interest income also saw mixed results, with fee-based income declining 8.6% while investment gains rose 34.2%.
As of September 2025, Bank of Guiyang’s non-performing loan ratio stood at 1.63%, up 0.05 percentage points year-on-year but down 0.07 percentage points from Q2. Its provision coverage ratio was 239.59%, down 17.48 percentage points from end-2024.
Notably, the bank’s dividend payout ratio has lagged behind peers. From 2016 to 2024, its payout ratio ranged between 16% and 20.53%, lower than most listed city commercial banks.
Despite these challenges, Bank of Guiyang’s capital adequacy ratios improved slightly, with its core tier-1 capital ratio reaching 12.82% as of September 2025.
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