The first bank to disclose quarterly results always draws attention. On October 23, Hua Xia Bank Co.,Limited (600015) reported its Q3 performance, becoming the focal point once again.
**Overall Pressure Persists** The bank posted revenue of RMB 64.881 billion for the first three quarters, down 8.79% year-on-year (YoY), while net profit attributable to shareholders fell 2.86% to RMB 17.982 billion. However, Q3 alone revealed a more complex picture: revenue dropped 15.02% YoY to RMB 19.359 billion, yet net profit surprisingly rose 7.62% to RMB 6.512 billion.
This "revenue decline, profit growth" paradox raises key questions: *How did Hua Xia Bank achieve profit growth amid market headwinds? Is it sustainable?*
**Short-Term Gains Mask Structural Weaknesses** The profit rebound stems largely from cost-cutting and risk adjustments rather than operational improvements:
1. **Provisioning Adjustments**: The bank reduced its loan loss provision coverage ratio from 161.89% at the start of the year to 149.33%, freeing up profit reserves. 2. **Aggressive Cost Control**: The "Nanniwan Initiative" slashed operating expenses by 9.42% YoY, while credit impairment losses fell over 15%. 3. **Liability Optimization**: Deposits grew 8.72%, outpacing loan growth (2.93%), helping stabilize net interest margin (NIM) at 1.55%, up 1 basis point QoQ.
Yet revenue fragility persists. President Qu Gang attributed the decline to a RMB 7.8 billion swing in fair value losses (from a RMB 3.326 billion gain in 2024 to a RMB 4.505 billion loss in 2025), exposing reliance on volatile financial markets.
**Underlying Risks Emerge** - **Asset Quality**: While the non-performing loan (NPL) ratio dipped slightly to 1.58%, the plunging provision coverage nears regulatory red lines, signaling weakening risk buffers. - **Capital Erosion**: Core Tier 1 capital adequacy fell to 9.33%, with total Tier 1 ratio at 11.14%, both trending downward. - **Market Skepticism**: Shares trade at just 30% of book value, prompting management to introduce valuation-boosting measures, including a RMB 31.902 million insider share buyback in September 2025.
**Strategic Overhaul in Progress** President Qu emphasized retail transformation and digital risk control as "bank-wide priorities." Leadership changes—notably the appointment of Fang Yi, former Beijing Bank Wealth Management chairman, as CRO—hint at adopting Beijing Bank’s retail and digital expertise.
However, challenges remain: regulatory penalties (RMB 87.25 million for internal control lapses) linger despite 95.34% rectification, and balancing short-term profitability with long-term investments under capital constraints will test the new team.
**Q4: The Decisive Test** Whether Hua Xia Bank can deliver sustainable revenue growth and asset quality will determine if this rebound marks a true turning point.
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