Recently, the shareholder return plan for the period 2026-2028 proposed by Jiangsu Suzhou Rural Commercial Bank Co.,Ltd. (ASX: 603323) was approved at the general meeting, yet it garnered a significant opposition vote of 10.34%.
In recent years, the bank's dividend payout ratio has been among the lowest when compared to the 41 A-share listed banks in China.
Dividend Payouts Lagging Behind Peers
The bank's recent annual general meeting resolution announcement revealed that while the motion to formulate the 2026-2028 shareholder return plan passed, the 10.34% opposition rate highlights investor concerns.
The previously disclosed plan states that the board should develop differentiated return strategies based on factors such as industry characteristics, development stage, business model, profitability, and significant capital expenditure plans.
The plan specifies that for the 2026-2028 period, if a dividend distribution is made in a given year, the cumulative cash distribution shall be no less than 10% of the distributable profit for that year; and the cumulative cash distributions over the most recent three years shall be no less than 30% of the average annual distributable profit for that period.
In 2023, the bank distributed a cash dividend of 1.8 yuan per 10 shares (pre-tax), with a total payout of approximately 3.25 billion yuan (pre-tax), resulting in a cash dividend payout ratio of about 18.6%, placing it at the lower end among A-share listed rural commercial banks.
For 2024, the cash dividend payout ratio was even lower, at 16.97%.
In its announcement regarding the 2025 profit distribution plan, the bank explained that a payout ratio below 30% considers the continuously strengthened capital regulatory requirements in the financial sector, and that retaining earnings serves as an internal source of capital replenishment and business development funding to support strategic implementation, optimize the business structure, and enhance risk resilience.
Slowing Growth in Net Profit Attributable to Parent
According to its 2025 annual report, the bank achieved operating income of 4.213 billion yuan, a year-on-year increase of 38 million yuan, or 0.92%. Net profit attributable to the parent company's shareholders reached 2.043 billion yuan, an increase of 98 million yuan, or 5.05% year-on-year. Earnings per share were 1.01 yuan.
While both revenue and net profit showed year-on-year growth, a longer-term view reveals a persistent slowdown in the growth rate of net profit attributable to the parent.
In 2022, the year-on-year growth rate for this metric peaked at 29.48%. From 2023 to 2025, the growth rates decelerated to 16.04%, 11.62%, and 5.05%, respectively.
In detail, for 2025, the bank's net interest income was 2.738 billion yuan, a decrease of 80 million yuan or 2.84% year-on-year. This consisted of interest income of 6.155 billion yuan, down 454 million yuan, and interest expense of 3.417 billion yuan, down 374 million yuan.
Non-interest net income for 2025 was 1.475 billion yuan, an increase of 118 million yuan. Within this, net fee and commission income grew by 65.99%, mainly due to a decrease in agency currency business fee expenses; investment income rose by 39.51%, primarily from increased bond capital gains; fair value change income fell by 201.55%, mainly due to a decline in fund valuations; exchange gains increased by 105.88%, largely from higher proprietary foreign exchange business income; and asset disposal income plummeted by 94.51%, primarily due to lower gains from property disposals.
Fee and commission income for 2025 was 171 million yuan, down 10.45% year-on-year. Both wealth management business and credit card business dragged on the performance of intermediary business, declining by 19.94% and 14.53%, respectively.
Furthermore, in 2025, the bank's asset disposal income decreased by 94.51%, mainly due to lower property disposal gains; other income fell by 85.87%, primarily due to a reduction in government subsidies.
Net Interest Margin Declines for an Eighth Consecutive Year
During the 2025 interim results briefing, the bank stated that for managing its net interest margin (NIM), it would adhere to its positioning of supporting agriculture and small businesses while serving the real economy, optimize its overall business strategy, implement refined management of assets and liabilities, focus on deploying quality assets, and further reduce the deposit cost rate through flexible pricing and reasonable term structure planning, aiming to stabilize the margin and enhance profitability through multiple measures.
However, the bank's NIM has continued to decline. The slowdown in its 2025 revenue growth is largely attributed to NIM compression.
In 2025, the bank's NIM was 1.41%, a decrease of 0.14 percentage points compared to the previous year.
This marks the eighth consecutive year of decline for the bank's NIM. It peaked at 2.98% in 2017. From 2018 to 2025, the NIM figures were 2.84%, 2.71%, 2.5%, 2.24%, 2.04%, 1.74%, 1.55%, and 1.41%, respectively.
By the end of the fourth quarter of 2025, the average NIM for commercial banks in China was 1.42%, placing the bank's figure for the same period below the industry average.
Special Mention Loan Migration Rate Rises Significantly
As of the end of 2025, the bank's total assets reached 230.907 billion yuan, an increase of 16.920 billion yuan or 7.91% from the beginning of the year. Total deposits were 182.959 billion yuan, up 12.710 billion yuan or 7.47%. Total loans amounted to 139.439 billion yuan, an increase of 10.105 billion yuan or 7.81%.
In 2025, the bank's non-performing loan (NPL) balance was 1.228 billion yuan, with an NPL ratio of 0.88%. The ratio of special mention loans was 1.33%. The provision coverage ratio stood at 370.17%, with a loan provision ratio of 3.26%.
Analyzing the loan distribution by industry, manufacturing, construction, wholesale and retail, leasing and business services, and real estate were the top five sectors by loan book balance in 2025.
Among these, the NPL ratios for the construction and real estate sectors both increased. The construction sector's NPL ratio rose from 0.46% in the previous year to 0.74%, while the real estate sector's NPL ratio surged from 0.26% to 4.88%.
Additionally, in 2025, the proportion of special mention loans increased by 0.13 percentage points year-on-year, and the proportion of loss loans increased by 0.12 percentage points.
Notably, the bank's special mention loan migration rate and other metrics have been rising in recent years. An increase in this rate indicates that loans previously classified as "special mention" are migrating to substandard, doubtful, or loss categories (i.e., becoming non-performing) at a faster pace. This serves as a leading indicator of deteriorating asset quality, signaling a potential future increase in the NPL ratio.
Specifically, from 2023 to 2025, the bank's special mention loan migration rates were 14.71%, 20.7%, and 32.89%, respectively. The 2025 figure represents a year-on-year increase of 12.19 percentage points. The substandard loan migration rate rose from 8.63% in 2023 to 40.45% in 2025, while the doubtful loan migration rate increased from 50.82% to 65.16%.
Amid the growing risk of a rising NPL ratio, the bank has previously received regulatory penalties related to non-performing asset disposal.
On April 11, 2025, an administrative penalty information disclosure form from the Suzhou Supervision Bureau of the National Financial Regulatory Administration showed that the bank was fined 600,000 yuan for issues including incomplete separation of risks between wealth management investments and proprietary investments, and non-compliant disposal of non-performing assets.
Concurrently, Gao Mingming, the Deputy General Manager of the bank's Asset Preservation Department, was given a warning and fined 60,000 yuan for non-compliant disposal of non-performing assets.
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