On August 18, Bank Of Nanjing Co.,Ltd. (SSE: 601009) disclosed that its first-half operating revenue and net profit attributable to shareholders grew by 10.94% and 8.17% year-on-year, respectively. Breaking down the revenue structure, growth was almost entirely driven by a 40% jump in net interest income, while the net interest margin continued to decline and non-interest income fell by more than 20% year-on-year. This is a growth story underpinned by a "volume-for-price" strategy and lower liability costs.
Net interest income reached 21.935 billion yuan, up 40.19% year-on-year, lifting its share of total operating revenue to 69.42%, a rise of 14.48 percentage points from the same period last year. The increase came from both ends: interest income grew 11.80% to 46.635 billion yuan, driven by balance sheet expansion, while interest expenses fell 5.24% to 24.700 billion yuan. However, while volume grew, pricing did not improve. The bank's net interest margin for the first half stood at 1.79%, down 7 basis points year-on-year, and has been narrowing for several consecutive years.
The sharp rise in interest income was not a result of improved asset-side pricing, but rather the outcome of accelerated loan growth combined with lower liability costs. Balance sheet expansion and liability management supported net interest income, yet the margin itself continues to erode profitability. This round of balance sheet growth has been led by the corporate segment: as of the end of June, corporate loans stood at 1.22 trillion yuan, up 12.33% from the start of the year, while retail loans grew only 2.72% to 344.176 billion yuan. Leasing and business services, wholesale and retail, water conservancy, environment and public facility management, and manufacturing remain the primary lending areas, with the expansion focus still on traditional corporate banking.
In contrast to the interest income side, non-interest income fell to 9.661 billion yuan in the first half, down 24.73% year-on-year. Among the components, net fee and commission income dropped 18.50% to 2.283 billion yuan, investment income fell 28.80% to 5.757 billion yuan, and investment income from trading financial assets plunged 47.02%. Investment income alone accounts for roughly 60% of non-interest income, and its sharp decline directly dragged on overall revenue. The picture is clear: strong interest income, weak non-interest income.
While headline indicators generally improved, credit impairment losses increased significantly and the non-performing loan ratio for corporate real estate ticked up, causing risk costs to rise quietly. This is also the main reason why revenue growth outpaced profit growth in the first half: a portion of the growth was consumed by higher provisions. On the capital front, total assets grew 7.13% from the start of the year to 3.24 trillion yuan, and loans increased 10.07%, reflecting rapid expansion. Yet the core Tier 1 capital adequacy ratio stood at only 9.37%, up a marginal 2 basis points from the beginning of the year, while the overall capital adequacy ratio declined 13 basis points to 13.02%. Under such rapid balance sheet growth, the bank's ability to organically replenish core capital remains limited.
Going forward, the sustainability of Bank Of Nanjing Co.,Ltd.'s growth will hinge on whether the net interest margin can stabilize amid improving liability costs, when non-interest income will recover, and whether non-performing exposures in corporate real estate continue to surface.
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