Bank of Suzhou Co., Ltd. (002966) recently came under scrutiny due to a "loan withdrawal" dispute with Wuxi Xuelang Environmental Technology Co., Ltd. (300385.SZ). According to Xuelang Environment's announcement, Bank of Suzhou's Wuxi branch filed a lawsuit over a financial loan contract dispute and applied for pre-litigation asset preservation, freezing some of Xuelang Environment's bank accounts.
This emergency loan withdrawal reflects the bank's passive response to potential credit risks, highlighting underlying asset quality pressures and rising non-performing loan risks.
**Slowing Growth Despite Dual Expansion** From 2022 to the first three quarters of 2025, Bank of Suzhou maintained revenue and profit growth, but the pace slowed significantly. By Q3 2025, revenue growth dropped to 2.02%, while net profit growth fell to 7.12%.
Revenue growth fluctuated at low levels in recent years: - 2022: 8.62% (RMB 11.763 billion) - 2023: 0.88% (RMB 11.866 billion) - 2024: 3.0% (RMB 12.22 billion)
Net profit growth also decelerated but remained relatively strong: - 2022: 26.13% (RMB 3.918 billion) - 2023: 17.41% (RMB 4.601 billion) - 2024: 10.2% (RMB 5.07 billion)
However, in Q1-Q3 2025, revenue reached RMB 9.477 billion (+2.02% YoY), while net profit stood at RMB 4.477 billion (+7.12% YoY). If this trend continues, full-year profit growth may dip below 10%, marking a five-year low.
**Asset Quality and Risk Signals** The bank's non-performing loan (NPL) ratio remained stable at 0.83% as of Q3 2025. However, its provision coverage ratio declined sharply: - 2022: 530.81% - 2023: 522.77% - 2024: 483.5% - Q3 2025: 420.59%
This suggests a conservative approach to risk reserves amid profit pressures. The bank's credit impairment losses rose 14.22% YoY to RMB 743 million in Q1-Q3 2025.
The lawsuit against Xuelang Environment—a loss-making environmental equipment maker—underscores growing corporate credit risks. Xuelang reported cumulative losses exceeding RMB 600 million from 2022 to 2024.
**Shifting Loan Structure: Consumer Loans Surge** Corporate loans now dominate Bank of Suzhou's portfolio, rising from 67.50% in 2022 to 75.40% in Q3 2025. Meanwhile, personal loans shrank to 24.60% (RMB 89.562 billion).
Within personal loans: - Mortgages: 39.65% (RMB 35.513 billion, +0.63% YoY) - Business loans: 34.18% (RMB 30.615 billion, -12.41% YoY) - **Consumer loans**: 26.17% (RMB 23.434 billion, +8.32% YoY)
To expand consumer lending, Bank of Suzhou partnered with 27 institutions, including Ant Group, ByteDance, and online lenders. Notably, two firms tied to the "Hanchen Group" were listed—a conglomerate previously flagged for compliance issues.
**Regulatory Risks from Partnerships** Hanchen-linked entities have faced penalties for financial reporting discrepancies and data privacy violations. Consumer complaints on platforms like Black Cat allege hidden fees, opaque rates, and aggressive debt collection by Hanchen-affiliated apps.
Under China's tightened "loan facilitation rules" (effective October 2025), banks must vet partners rigorously. Bank of Suzhou faces pressure to ensure compliance while balancing growth.
Moving forward, the bank must optimize its asset-liability structure, enhance profitability, and embed stronger risk management into its operations to navigate an increasingly regulated financial landscape.
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