Chongqing Rural Commercial Bank (601077.SH) has been thrust into the spotlight after receiving an 8.7 million yuan penalty for five regulatory violations, a record fine amount for the bank over the past three years that highlights significant illegal activities in its credit review domain. Under the financial regulatory "dual penalty system," 10 responsible individuals were also penalized accordingly, with two, including former Vice President Shu Jing, banned from the industry for life. Notably, Shu Jing was dismissed in March 2024 and later expelled from both the Party and public office for severe disciplinary and legal violations.
Shu Jing served as Vice President of Chongqing Rural Commercial Bank for over eight years, holding significant management responsibilities in the credit sector for an extended period. Her tenure was marred by serious disciplinary violations, including irregular operations in credit approval and leveraging her authority for personal gain. While the bank's loan portfolio grew continuously and its non-performing loan (NPL) ratio decreased during her tenure, the growth of retail loans slowed, and the NPL ratio began to rise in her final two years.
Amidst these stumbles in credit risk control and executive accountability, the bank's performance reports also signal an "uneven" picture. While both revenue and net profit increased year-on-year in the first three quarters, various business lines showed divergent trends. Net interest income grew after three consecutive years of decline, investment returns fell back after five years of rapid growth, and net fee and commission income continued to shrink.
The penalty details reveal five specific violations: inadequate "three reviews" of loans, insufficient investigation and accountability for major risk losses, errors in non-statistical data, failure to verify the source of margin funds, and rolling acceptance bill issuance. Issues with credit review were undoubtedly the central focus. The 8.7 million yuan fine is the largest penalty the bank has received in three years and marks its second million-yuan-plus fine this year, following a 2.96 million yuan penalty in January for foreign exchange business violations. In November 2022, the bank was also fined 12.85 million yuan for issues including inadequate loan "three reviews."
In recent years, the "dual penalty system" for financial institutions and their responsible persons has become standard practice. Regulation now penetrates beyond the surface to the substance of business operations and decision-making chains. The shift from penalizing only institutions to penalizing both institutions and individuals, including severe sanctions such as warnings, fines, disqualification from positions, and even industry bans for key personnel, reflects a strategy of precise risk mitigation and accountability at the source. This is a concrete manifestation of "sharp-toothed and thorny" regulation with clear edges. In this case, 10 individuals were penalized to varying degrees: four received warnings and fines of 50,000 yuan each, three received warnings, one was fined, and two—former Vice President Shu Jing and former Chief Lending Officer Feng Hongwei—were banned for life from working in the banking industry.
In financial regulatory practice, a lifetime industry ban is among the most severe administrative punishments for individuals, indicating particularly serious circumstances, major losses caused, or specific illegal acts constituting a crime under relevant financial laws. Shu Jing, one of those banned, had already been ousted; she was dismissed from her vice president role on March 28, 2024, and the following day, the Chongqing Commission for Discipline Inspection and Supervision announced she was under investigation for suspected severe disciplinary and legal violations.
According to an August 2024通报 from the Chongqing Commission for Discipline Inspection, the investigation found Shu Jing engaged in various illegal activities: accepting gifts,礼金, and banquets; lax oversight in loan approval; violating non-compete obligations for personal enrichment; illegally operating similar businesses using her position for substantial illicit gains; misappropriating large sums of public funds; and leveraging her position for others' benefit in loan approvals while illegally accepting huge amounts of money and property. She was expelled from the Party and public office, her illicit gains were confiscated, and her suspected criminal case was transferred to procuratorial organs.
Born in 1972, Shu Jing previously worked for many years at China Construction Bank (601939.SH) and was a long-serving employee of Chongqing Rural Commercial Bank, joining in August 2008 at age 36. She held positions including General Manager of the Credit Approval Department, General Manager of the Corporate Business Department, and General Manager of the Business Department before being promoted to Vice President in October 2015, a role she held for over eight years. Her career history and the disciplinary findings indicate a lack of effective supervision and self-restraint in exercising authority in critical roles. The other individual banned for life, Feng Hongwei, served as Chief Lending Officer, exposing similar deficiencies in oversight within the credit approval process.
The timeline of Shu Jing's investigation suggests the violations addressed by the fine occurred before March 2024. During her tenure as Vice President, the bank's total loan portfolio generally experienced continuous growth, though the pace slowed in her final two years, while the NPL ratio first rose then fell. By the end of the third quarter, the loan balance reached 777.973 billion yuan, up 8.92% from the start of the year, comprising 418.434 billion yuan in corporate loans and 303.676 billion yuan in personal loans. Before 2021, credit scale growth was rapid, with annual increases above 10%; however, growth moderated after 2022, with rates of 8.68%, 6.96%, and 5.55% from 2022 to 2024, respectively.
Changes in total loan scale were significantly influenced by retail loans. Before 2021, retail loans expanded rapidly, with an average annual growth rate exceeding 20% over the previous five years. After 2022, however, retail loan growth plummeted to below 3%, with only a 0.55% increase in 2024. Chongqing Rural Commercial Bank adheres to a "retail-focused" strategy, leveraging its extensive network, teams, and customer base across urban and rural areas. Nevertheless, the slowdown in retail financial growth, particularly retail credit, in recent years results from a combination of macroeconomic conditions, regulatory policies, and market cycles. Weakened household income expectations and shrinking demand for major consumption items like housing have led to sluggish core credit growth; downward adjustments to existing mortgage rates and intensified competition in consumer credit continue to squeeze bank interest margins; simultaneously, tighter regulatory controls on the use of retail loan funds and decreased bank risk appetite are driving a business model shift from scale expansion to deepening existing customer relationships and optimizing structure.
Looking at the NPL ratio, it rose continuously before 2020, peaking at 1.31% that year. In recent years, as banks intensified NPL disposal, tightened credit approval, and raised risk control standards—partly mitigating risks through debt-to-equity swaps and asset securitization—the sector's overall NPL ratio has trended downward. Chongqing Rural Commercial Bank's NPL ratio has also declined consistently since 2021, standing at 1.12% in Q3, down 0.06 percentage points from the end of the previous year. The trajectories of corporate and retail loan NPL ratios diverged. The corporate loan NPL ratio continued to decrease, falling significantly to 0.68% in Q3 from 1.04% at the end of the previous year and down 1.26 percentage points from its 2020 peak. Previously high NPLs in the real estate sector, which reached 9.27% in 2023, have been largely resolved as real estate loan exposure was continuously reduced, with sector NPLs basically cleared since 2024.
In contrast to corporate loans, Chongqing Rural Commercial Bank's retail loans not only experienced slowing growth but also a persistently rising NPL ratio, which reached 2.04% in Q3. This represents an increase of 0.44 percentage points from the end of the previous year and a substantial rise of 1.43 percentage points from the low of 0.61% in 2020. In the first three quarters, NPL ratios increased for individual mortgages, personal business and re-employment loans, and other personal loans. The bank attributed this to external uncertainties, insufficient domestic effective demand, and some individual customers' incomes falling short of expectations, stating that retail loan asset quality still faces pressure, leading to the year-end NPL ratio increase.
The predecessor of Chongqing Rural Commercial Bank was the Chongqing Rural Credit Cooperative, established in 1951. It was restructured into a commercial bank in 2008 amid rural credit cooperative reforms. It listed on the Hong Kong Stock Exchange Main Board in 2010, becoming the first listed rural commercial bank and the first listed bank in Western China. It subsequently listed on the Shanghai Stock Exchange Main Board in October 2019, becoming the first rural commercial bank and the first bank in Western China with A+H listings. By the end of Q3, its total assets reached 1.66 trillion yuan, up 9.3% from the start of the year, ranking first among A-share listed rural commercial banks and establishing it as a "pacesetter" in its category.
Regarding performance, after two years of declining revenue, 2024 saw a return to growth, which continued into the first three quarters of 2025 with both scale and profit increases. Q3 operating revenue was 21.658 billion yuan, up 0.67% year-on-year, while net profit attributable to shareholders was 10.694 billion yuan, up 3.74%. Overall, however, revenue pressure remains significant with low growth, and net profit growth has slowed consecutively since 2022, with rates of 13.79%, 7.49%, 6.1%, and 5.6% from 2021 to 2024, respectively. Q3 net interest income was 17.85 billion yuan, up 6.88% year-on-year, marking growth after three consecutive years of decline, primarily benefiting from well-controlled deposit costs and a significant decrease in interest expense.
Prior to 2024, the bank's investment income had grown rapidly for five consecutive years, reaching 4.198 billion yuan in 2024—a surge of 93.56%—becoming a key engine for revenue growth and accounting for 14.86% of total revenue, a substantial increase from 2.48% in 2019. The return to revenue growth that year was mainly driven by this investment income surge. Persistently pressured net interest margins from traditional deposit-loan businesses have forced financial institutions to seek non-interest income, with investment returns becoming a critical avenue. The deepening bond, fund, asset management product, and derivatives markets have provided more diverse and complex investment tools and strategies. Wang Pengbo, Chief Financial Analyst at BoTong Consulting, noted that the sustained bull market in bonds during 2024 provided a solid foundation for growth in bank investment income, making it a vital support for alleviating revenue pressure and stabilizing profits.
This year, however, the bank's investment performance has been less ideal. Investment income for the first three quarters was 3.495 billion yuan, down 8.08% year-on-year, while losses from fair value changes expanded from 485 million yuan to 807 million yuan. The bank stated in its interim report that low market interest rates in the first half narrowed profit margins on trading financial assets, leading to lower investment income and fair value change gains/losses compared to the same period last year. Net fee and commission income was 1.057 billion yuan, down 16.68% year-on-year, continuing a three-to-four-year trend of contraction.
Since 2025, Chongqing Rural Commercial Bank has undergone adjustments in several key positions as part of efforts to continuously improve corporate governance and optimize management structure. Such adjustments typically follow strict internal decision-making and regulatory reporting procedures to ensure operational stability and continuity. In January, Zhang Peizong stepped down as Vice President, Board Secretary, and Executive Director due to work reassignment. On April 16, after a six-month vacancy, 48-year-old Liu Xiaojun was elected Chairman and Executive Director. Liu, with backgrounds at China Construction Bank and CITIC Trust, previously served as Party Secretary and Chairman of Chongqing Development Investment Co., Ltd. However, after more than eight months, his qualifications for the chairman role have yet to receive regulatory approval. On April 28, Zhang Jin's qualification as Vice President was approved, formalizing an appointment process that took 13 months; he is a veteran of Bank Of Chongqing Co.,Ltd. (601963.SH) with over 20 years of service there.
On May 22, Tang Li's qualification as Vice President was approved. Tang Li, appointed Vice President in December 2024, is the bank's only female vice president and previously held positions at Industrial And Commercial Bank Of China Limited (601398.SH) for many years, including serving as a branch manager in Chongqing. On September 8, Vice President Tan Bin additionally assumed the role of Board Secretary, though this qualification also awaits regulatory approval. On December 24, the bank announced the appointment of Liu Yi as Vice President, pending regulatory approval. Liu Yi, born in February 1980, is a post-80s executive who also spent many years at Bank of Chongqing, serving as a branch manager. In April 2022, he transitioned to government roles, successively holding positions as Director of the Jiangbei District Financial Work Office, Director of the Jiangbeizui Central Business District Management Committee Office, and Deputy District Chief of Jiangbei District People's Government.
Currently, the bank's executive team is structured as a "one president, five vice presidents" lineup led by Sui Jun. Most members have years of experience within Chongqing's local financial system. The critical question remains whether this management team can effectively strengthen internal checks and balances, repair credit management processes, and revitalize the retail finance business.
Comments