Bank dividends, while appearing as profit distribution, fundamentally represent a bank's strategic choice between operational pressures, capital replenishment, and shareholder returns.
Examining two regional banks side-by-side offers a compelling contrast. Recently, Gansu Bank's 2025 dividend plan drew attention: despite full-year net profit attributable to parent company shareholders being under 6 billion yuan, it proposed a cash dividend of approximately 17.78 billion yuan, a payout exceeding three times its annual profit.
In contrast, Bank Of Zhengzhou Co.,Ltd. has provided a completely different answer. According to its 2025 annual report, the bank will not distribute cash dividends, issue bonus shares, or convert capital reserves into shares. This means that after resuming a symbolic dividend in 2024, Bank Of Zhengzhou Co.,Ltd.'s cash dividend payments have once again been suspended.
The comparison between the two banks is intriguing. Neither Bank Of Zhengzhou Co.,Ltd. nor Gansu Bank operates in a high-growth, high-profitability comfort zone. They share a common backdrop of narrowing interest margins, profit pressures, and diverging operational performance among regional banks. Yet, on the matter of dividends, one chooses to utilize historical retained earnings to reward shareholders, while the other opts to retain current-year profits to bolster its capital base.
This raises a more significant question: when a regional bank enters a downturn phase, should it prioritize rewarding shareholders or safeguarding its capital buffer?
Bank Of Zhengzhou Co.,Ltd. has chosen to retain its profits. The bank was not unprofitable in 2025. Its annual report shows operating income of 129.21 billion yuan, a year-on-year increase of 0.34%, and net profit attributable to parent company shareholders of 18.95 billion yuan, up 1.03%. Both revenue and profit maintained slight positive growth.
Simultaneously, the bank's total assets reached 7,436.74 billion yuan, an increase of 9.95% from the end of the previous year. Total loans amounted to 4,102.64 billion yuan, up 5.82%, and total deposits were 4,630.75 billion yuan, rising 14.47%.
Therefore, Bank Of Zhengzhou Co.,Ltd.'s operations in 2025 were not in a contraction phase; it achieved low-speed profit growth while continuing to expand its scale.
However, in terms of profit distribution, the bank chose not to pay a cash dividend. A review of its history shows that its dividend policy has been inconsistent since its A-share listing. It paid dividends normally in 2018 and 2019, then suspended cash dividends for several consecutive years from 2020 to 2023. It resumed a dividend of 0.2 yuan per 10 shares in 2024, totaling approximately 182 million yuan, with a payout ratio of about 9.69%. In 2025, it has returned to a policy of no distribution or conversion.
In its 2025 annual report, Bank Of Zhengzhou Co.,Ltd. stated that this decision was made, firstly, because the bank is in a critical stage of deepening reform and transformational reshaping. Retaining undistributed profits helps solidify the capital foundation for high-quality development, further enhance risk resilience, and provide strong support for operational stability. Secondly, against the backdrop of stricter financial regulation and intensified capital constraints, internal supplementation through profit retention is a primary and effective method to ensure adequate capital levels. The retained profits will be used to supplement Core Tier 1 capital and improve capital adequacy.
This is where it contrasts with Gansu Bank. Gansu Bank's 2025 proposal was to pay a cash dividend of 1.18 yuan per 10 shares, totaling about 17.78 billion yuan. Its 2025 net profit attributable to parent company shareholders was approximately 5.88 billion yuan, resulting in a payout ratio exceeding 300%. The uniqueness of this high dividend lies in the fact that it is not solely supported by current-year profits but relies more on accumulated retained earnings from previous periods.
The two approaches cannot be simply judged as "good" or "bad," as the constraints facing regional banks are not identical. For investors, a higher dividend is not necessarily better, but consistency is crucial. Investors in bank stocks, in particular, place greater emphasis on dividends, valuation, and operational stability. Once dividend payments are suspended for an extended period, the market naturally questions: Is the bank retaining funds for better development, or because it no longer has sufficient capacity to reward shareholders?
The answer cannot be found solely in the dividend policy; one must examine Bank Of Zhengzhou Co.,Ltd.'s capital position.
The decline in capital adequacy ratios is the practical constraint behind the zero-dividend decision. For banks, there is an inherent relationship between dividends and capital. Business expansion relies on capital support. Larger asset scales and greater loan disbursements lead to more significant capital consumption. If profit growth keeps pace with asset expansion, a bank can balance capital replenishment and dividends. If profit growth slows while capital adequacy ratios continue to decline, profit distribution faces stronger constraints.
This is precisely the issue Bank Of Zhengzhou Co.,Ltd. faces. As of the end of 2025, its Core Tier 1 capital adequacy ratio was 8.45%, its Tier 1 capital adequacy ratio was 10.44%, and its total capital adequacy ratio was 11.71%. These three metrics decreased by 0.31, 0.37, and 0.35 percentage points, respectively, from the end of 2024. Over a longer horizon, its Core Tier 1 capital adequacy ratio was 9.49% in 2021, declining to 8.45% by 2025, a cumulative drop of 1.04 percentage points over four years.
Behind the declining capital metrics is the continued expansion of its asset scale. By the end of 2025, total assets reached 7,436.74 billion yuan, up 9.95% year-on-year; total loans were 4,102.64 billion yuan, up 5.82%; and total deposits were 4,630.75 billion yuan, up 14.47%. In other words, the bank's overall scale is still growing, and its function in serving the local economy and real economy financing is extending, but profit growth is clearly not keeping pace with asset expansion.
This is the crux of the matter. In 2025, Bank Of Zhengzhou Co.,Ltd.'s operating income grew only 0.34%, and net profit attributable to parent company shareholders grew only 1.03%, while total assets grew nearly 10%. The bank's scale is expanding, capital consumption continues, but profit retention is insufficiently robust. Under these circumstances, continuing cash dividends would equate to allowing a portion of much-needed capital to flow out of the banking system when capital is already relatively tight.
Moreover, Bank Of Zhengzhou Co.,Ltd.'s profitability is no longer at a high level. In 2021, its net profit attributable to parent company shareholders was 32.26 billion yuan; by 2025, this figure had fallen to 18.95 billion yuan. Over the same period, its net interest margin narrowed from 2.31% in 2021 to 1.61% in 2025, a cumulative contraction of 70 basis points. Its weighted average return on equity also declined from 7.17% in 2021 to 3.16% in 2025.
Viewed together, the logic becomes clear: Bank Of Zhengzhou Co.,Ltd. is not simply unwilling to pay dividends; rather, there is a significant tension between its profit margin, capital replenishment needs, and asset expansion.
However, a zero-dividend policy does not inherently equate to prudence. Investors may understand a bank's need to preserve capital during a special phase, but they are more concerned with one question: Can these retained funds ultimately translate into better operational results?
Bank Of Zhengzhou Co.,Ltd.'s financial report is not without positive developments. Regarding asset quality, its non-performing loan ratio was 1.71% at the end of 2025, down 0.08 percentage points from the end of the previous year. Its provision coverage ratio was 185.81%, an increase of 2.82 percentage points. Over a longer period, the NPL ratio has gradually decreased from 2.08% at the end of 2020 to 1.71% at the end of 2025, and the provision coverage ratio has improved from 160.44% to 185.81%.
This indicates that Bank Of Zhengzhou Co.,Ltd. still shows signs of improvement in its risk metrics. For a regional bank, the stability of asset quality directly affects its ability to retain profits and its future capacity to resume dividend payments.
Another area worth observing is its retail transformation. The bank's annual report mentions that against the backdrop of narrowing net interest margins and intensifying industry competition, it has positioned retail transformation as a breakthrough for high-quality development, building a service system around four key roles: "Citizen Steward," "Financing Steward," "Wealth Steward," and "Rural Steward." By the end of 2025, its savings deposit balance was 2,718.47 billion yuan, an increase of 24.60% year-on-year. Personal loan balance was 970.14 billion yuan, up 6.66%, and wealth management financial assets under management reached 572.52 billion yuan, growing 11.57%.
These figures at least indicate that Bank Of Zhengzhou Co.,Ltd. is not solely relying on scale expansion to maintain growth but is attempting to improve its funding base and customer structure through retail customer operations, county-level finance, and wealth management.
However, judging by financial results, this transformation requires more time to validate. Although Bank Of Zhengzhou Co.,Ltd.'s revenue and net profit returned to positive growth in 2025, the growth rates remain low. Its net interest margin continues to narrow, and its ROE remains at a relatively low level. In other words, while risk metrics are improving and retail transformation is progressing, these changes have not yet fully translated into more pronounced profit elasticity.
This is precisely what the market needs to continue observing following Bank Of Zhengzhou Co.,Ltd.'s zero-dividend decision.
Comparing Gansu Bank and Bank Of Zhengzhou Co.,Ltd. reveals that the dividend choices of regional banks are never as simple as being "generous" or "stingy."
Gansu Bank, during a period of profit pressure, proposed a dividend exceeding three times its current-year profit, drawing on shareholder returns and the allocation of historical retained earnings. Bank Of Zhengzhou Co.,Ltd., while still profitable, chose a zero-dividend policy, constrained by the realities of capital replenishment, asset expansion, and profitability.
One is cashing out past accumulations; the other is retaining current profits to replenish its lifeblood.
It is difficult to simply judge which choice is better.
For banks, overly aggressive dividend payouts may jeopardize long-term capital safety, while overly conservative policies can erode investor confidence. The truly ideal state is having sufficiently stable operational capabilities, strong internal capital generation capacity, and the ability to form stable dividend expectations.
Bank Of Zhengzhou Co.,Ltd.'s zero-dividend policy for 2025 leaves the market with a longer-term question: Can this Henan-based corporate bank transform the retained profits into a thicker capital base, more stable asset quality, and more sustainable profitability?
If it can, today's zero dividend is merely a temporary concession.
If it cannot, the zero-dividend issue will transcend being just a dividend matter and become a key variable for the market to reprice Bank Of Zhengzhou Co.,Ltd.
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