CBHB's Xiamen Free Trade Zone Branch was recently fined 390,000 yuan for inadequate credit investigation. According to incomplete statistics, since 2024, 10 of CBHB's branches have been penalized for credit business violations. While internal control risks are exposed, the bank's asset quality indicators show deterioration, with its personal consumer loan NPL ratio rising to 12.37% by year-end 2024.
**Rising NPL Ratio in Personal Consumer Loans** The Xiamen financial regulator's penalty notice cited inadequate credit investigation as the reason for the fine against CBHB's Xiamen Free Trade Zone Branch, with one responsible individual receiving a warning.
As part of commercial banks' credit operations, the quality of credit investigations affects subsequent loan approval decisions. In recent years, multiple CBHB branches have violated regulations in credit investigations and post-loan management. In July, CBHB's Taiyuan Branch was fined 950,000 yuan for inadequate credit investigations and working capital loan management. The same month, CBHB's Hefei Branch was fined 600,000 yuan for disbursing fixed-asset loans exceeding project progress and inadequate pre-loan investigations for personal business loans.
Amid frequent regulatory breaches, CBHB's asset quality has worsened. Financial data shows its NPL ratios were 1.76%, 1.78%, and 1.76% at the end of 2022, 2023, and 2024, respectively. By June 2024, the ratio rose to 1.81%, higher than the industry average of 1.49%.
A breakdown reveals that corporate loans and advances accounted for about 70% of CBHB's NPLs by end-2024, with personal loans making up 20%. The NPL ratios for corporate and personal loans stood at 1.11% (down 0.73 percentage points YoY) and 4.15% (up 1.9 percentage points YoY), respectively. Notably, the NPL ratio for personal consumer loans surged 7.93 percentage points YoY to 12.37%.
A report by United Ratings highlighted that declining repayment capacity among internet-based long-tail borrowers, coupled with reduced internet consumer loan volumes, led to the sharp rise in personal consumer loan NPLs, warranting close monitoring of future asset quality trends.
**Share Price Down 80% from IPO Level** CBHB has been actively disposing of non-performing assets. The report noted that the bank resolved 3.742 billion yuan in NPLs in the first half of 2024.
On October 10, CBHB announced plans to publicly auction distressed debt assets, involving principal of about 49.937 billion yuan, interest of 10.436 billion yuan, penalty interest of 9.334 billion yuan, and 126 million yuan in judicial fees—totaling nearly 70 billion yuan.
As one of China's national joint-stock commercial banks, CBHB listed on the Hong Kong Stock Exchange on July 16, 2020. In the first three quarters of 2024, its operating income fell 2.64% YoY to 19.326 billion yuan, while net profit rose 4.65% to 4.988 billion yuan. CBHB's net interest margin has narrowed overall, standing at 1.45%, 1.19%, 1.12%, and 1.20% at the end of 2022, 2023, 2024, and June 2024, respectively.
In the secondary market, CBHB's shares closed at HK$0.94 on December 24, down 80.4% from its IPO price of HK$4.8.
Notably, Qi Jun's appointment as CBHB's Chief Risk Officer was approved in July 2024. His resume shows prior experience in risk management at ICBC.
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