The National Financial Regulatory Administration's Wuxi branch recently issued an 850,000 yuan penalty against Jiangsu Changshu Rural Commercial Bank's Wuxi branch, bringing the bank back into regulatory spotlight. This penalty, concerning inadequate employee behavior management and loan fund backflow violations, adds to the bank's regulatory record this year and exposes ongoing compliance management gaps.
A review of the first half of the year reveals multiple compliance failures: from credit "three checks" lapses at branches to dense penalties for controlling village banks, from bond trading controversies involving alleged "market manipulation" to performance growth deceleration and profit dependence on investment income, and rising non-performing rates for personal business loans amid regional expansion. Jiangsu Changshu Rural Commercial Bank, known as a "micro-finance benchmark," finds itself trapped in typical challenges facing small and medium banks during transformation, with its 2025 operational trajectory becoming a microcosm of the industry's struggle to balance compliance and development.
**Dense Penalty Records Reveal Frequent Compliance Gaps**
On August 8, the National Financial Regulatory Administration's Wuxi branch issued a penalty targeting multiple violations by Jiangsu Changshu Rural Commercial Bank's Wuxi branch, with two management personnel simultaneously receiving regulatory penalties.
The penalty notice shows that the main violations of the Wuxi branch included inadequate employee behavior management and loan funds backflowing as bank acceptance bill guarantees. The National Financial Regulatory Administration's Wuxi branch imposed a fine of 850,000 yuan. Yang Lilin, the then general manager of the business department, received a warning and 55,000 yuan fine for the same issues. Additionally, Qian Lingfei, then head of the small enterprise team at Huishan branch, received a warning and 55,000 yuan fine for loan fund backflow violations.
Among the two violations penalized, "loan fund backflow as bank acceptance bill guarantees" directly points to core loopholes in credit fund usage control. According to banking regulatory requirements, loan funds must be used strictly according to agreed purposes. Backflowing to banks as bill guarantees not only violates the original lending intent but may also amplify leverage risks through "loan-for-bill" schemes.
Looking back at the first half of 2025, Jiangsu Changshu Rural Commercial Bank's violation records extend beyond this single incident. On April 28, the Wuxi branch was fined 250,000 yuan for inadequate "three checks" on personal consumer loans. Receiving another penalty within just five months exposes weak remediation effectiveness.
More concerning is the frequent violations at village banks controlled by the bank. In February, Xingfu Village Bank was fined 800,000 yuan for "inadequate loan management and weak employee behavior management." In March, Suqian Sucheng Xingfu Village Bank was fined 523,000 yuan for failing to fulfill customer identity verification obligations. In April, Enshi Xingfu Village Bank was fined 20,000 yuan for credit information management violations. Within less than half a year, affiliated institutions received dense penalties, indicating that Jiangsu Changshu Rural Commercial Bank needs to strengthen control over subsidiary institutions during regional expansion.
Public information shows that Xingfu Village Bank is a banking financial institution under Jiangsu Changshu Rural Commercial Bank, approved by the former China Banking and Insurance Regulatory Commission. Currently, it has established the nation's first investment management-type village bank, with 30 legal entity institutions distributed across Hubei, Jiangsu, Henan, Guangdong, and Hainan provinces.
Notably, in December 2024, the National Association of Financial Market Institutional Investors announced that Jiangsu Changshu Rural Commercial Bank had problems including "market price manipulation" and "benefit transfer" in government bond secondary market trading. Its bond trading internal controls were inadequate, with excessive trader incentives leading traders to distort market prices through concentrated capital advantages, continuous buying and selling, and self-dealing.
**Performance Growth Shifting Gears, Profit Dependence on "Non-Core Business"**
The 2025 interim report shows Jiangsu Changshu Rural Commercial Bank achieved operating revenue of 6.062 billion yuan, up 10.1% year-on-year, and net profit attributable to shareholders of 1.969 billion yuan, up 13.51% year-on-year.
While double-digit growth appears impressive on the surface, growth momentum is entering a plateau phase. From 2022 to 2024, revenue growth declined from 15.07% to 10.53%, and net profit growth dropped from 25.39% to 16.2%. Compared to the first half of 2024's revenue growth of 12.03% and net profit growth of 19.58%, the first half of 2025 showed significantly slower growth.
Additionally, the bank's investment income reached 1.201 billion yuan in the first half, surging 30.94% year-on-year, accounting for 85% of non-interest income and exceeding 60% of net profit attributable to shareholders. This "investment-supported revenue" model is closely related to the overall banking industry environment.
Against the backdrop of weak credit demand and continuously narrowing net interest margins, small and medium banks have increased their bond allocation efforts. By the end of June 2025, small and medium banks' bond investments reached 46.44 trillion yuan, accounting for 22.42% of total assets. However, Jiangsu Changshu Rural Commercial Bank's allocation intensity far exceeds the industry average: its financial investment assets reached 109.849 billion yuan, accounting for 27% of total assets, growing 17.9% from the end of 2024. The risks of over-reliance on bond investments have already emerged: the 2024 bond trading violation incident was an inevitable result of aggressive allocation.
In contrast, as a "micro-finance benchmark," Jiangsu Changshu Rural Commercial Bank's loan business growth lacks momentum: total loan balance in the first half was 251.471 billion yuan, only growing 4.4% from the beginning of the year; net interest margin fell from the industry's upper-middle level to 2.58%, down 0.13 percentage points from the beginning of the year.
**Asset Quality Under Pressure, Regional Expansion Sowing "Mines"**
While performance growth shifts gears, Jiangsu Changshu Rural Commercial Bank's asset quality concerns are concentrated, with rising non-performing rates in core business personal business loans becoming the most prominent risk point.
Interim report data shows that while the overall non-performing rate remained stable at 0.76%, maintaining a good level, the personal loan non-performing rate rose 0.08 percentage points to 1.02%. Personal business loans, accounting for 69.3% of personal loans, saw their non-performing rate surge from 0.95% at the beginning of the year to 1.13%, an increase of 0.18 percentage points, becoming the "disaster area" dragging down asset quality.
According to the distribution of personal business loans and non-performing rates by amount, non-performing rates rose across all amount ranges: small loans under 300,000 yuan saw non-performing rates rise from 1.16% to 1.28%, loans of 1-2 million yuan similarly rose to 1.28%, and the 500,000-1 million yuan range showed the largest increase, from 0.71% to 1.22%.
To break through local market ceilings, Jiangsu Changshu Rural Commercial Bank attempted to shift its business focus to other regions. In the first half of 2025, personal business loan balances in regions outside Changshu reached 86.214 billion yuan, accounting for 91.27% of the bank's total such loans. However, regional management capabilities seemingly failed to keep pace, leading to expanded risk exposure: for personal business loans, non-performing rates in Jiangsu province outside Changshu rose from 0.81% to 1.08%, while rates outside Jiangsu province remained stable at 1.22% but significantly higher than the local rate of 1.27%.
Risk transmission has begun affecting risk resistance capabilities. The bank's provision coverage ratio fell from 500.51% at the beginning of the year to 489.53% in the first half, down 10.98 percentage points; capital adequacy ratio dropped from 14.19% to 13.6%, and core tier-1 capital adequacy ratio fell from 11.18% to 10.73%, with accelerating capital consumption.
From the August 850,000 yuan penalty to the interim report's performance growth decline and personal business loan asset quality fluctuations, Jiangsu Changshu Rural Commercial Bank's 2025 operational trajectory reflects common challenges facing small and medium banks in transformation: compliance management cannot keep pace with expansion speed, weak core business growth forces reliance on investment income, while regional expansion plants asset quality risks.
For Jiangsu Changshu Rural Commercial Bank, whose core competitive advantage lies in "micro-finance," 2025 is nearing its end, making fourth-quarter asset quality changes particularly worthy of attention. Whether the bank can find balance amid penalties and concerns will not only affect its own development but also provide a mirror for similar rural commercial banks' transformation.
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