Chongqing Rural Commercial Bank Co.,Ltd. reported robust credit expansion and steady interest margins in its 2025 interim results. The bank achieved revenue of 14.7 billion yuan in the first half of 2025, up 0.46% year-over-year, with net profit attributable to shareholders reaching 7.7 billion yuan, representing a 4.63% increase. As of Q2 2025, the non-performing loan (NPL) ratio stood at 1.17% and provision coverage ratio at 355.6%, remaining flat and declining 7.8 percentage points respectively compared to the previous quarter.
**Financial Performance: Net Interest Margin Declined Only 1bp in H1**
H1 2025 operating revenue and net profit growth rates were 0.46% and 4.63% respectively, down 0.9 and 1.6 percentage points from Q1 2025. The narrowing decline in net interest margin and reduced credit costs provided positive contributions to performance, while rising cost-to-income ratio and decreased fee income created headwinds.
**Net Interest Income:** Up 5.98% year-over-year, accelerating 0.7 percentage points from Q1 2025. The H1 2025 net interest margin was 1.60%, down only 1bp from 2024 annual level (flat in Q1 and down 1bp in Q2), showing convergent compression mainly due to significant improvement in liability costs.
**Asset Side:** H1 2025 yields on interest-earning assets and loans were 3.14% and 3.70% respectively, down 23bp and 22bp from 2024 annual levels. Corporate and personal loan yields declined 23bp and 36bp to 3.92% and 3.85% respectively.
**Liability Side:** H1 2025 costs of interest-bearing liabilities and deposits were 1.64% and 1.52% respectively, down 22bp and 21bp from 2024 levels. Corporate and personal deposit costs fell 16bp and 21bp to 1.14% and 1.59% respectively. The bank strengthened high-cost deposit quota controls and enhanced differentiated pricing capabilities for various customer types, achieving notable deposit cost management results.
**Fee and Commission Income:** Declined 13.2% year-over-year, with the decline widening 10.0 percentage points from Q1 2025. Agency and trust services (38.0% of H1 fee income) fell 8.8% mainly due to reduced underwriting fees, while wealth management services (19.7%) grew 2.59% as the bank actively established distribution partnerships with quality banks.
**Other Non-Interest Income:** Decreased 17.7% year-over-year, with the decline expanding 1 percentage point from Q1 2025, primarily due to investment income (112.8% of other non-interest income) falling 10.2%.
**Assets and Liabilities: Focused on Strategic Priorities, Intensified Credit Support**
**Assets:** Total assets reached 1.63 trillion yuan and total loans 765.2 billion yuan at Q2 2025 end, up 8.0% and 8.3% year-over-year respectively. H1 2025 net loan growth was 51.0 billion yuan, with corporate and personal loans increasing 58.2 billion yuan and 7.9 billion yuan respectively, both achieving year-over-year acceleration.
The bank actively supported the Chengdu-Chongqing Economic Circle and New International Land-Sea Trade Corridor construction, with infrastructure-related loans increasing 30.3 billion yuan. For personal loans, the bank leveraged big data capabilities to enhance product services and expand consumer scenarios, with consumer loans growing 7.5 billion yuan. The bank also reduced bill financing by 15.2 billion yuan, further optimizing loan structure.
**Liabilities:** Total deposits reached 1.03 trillion yuan at Q2 2025 end, up 8.9% year-over-year. H1 2025 net deposit growth was 83.2 billion yuan, mainly from personal time deposits (+72.8 billion yuan). Time deposits accounted for 75.66% of total deposits, up 2.2 percentage points from year-end.
**Asset Quality: Personal Loans Face Pressure**
The Q2 2025 NPL ratio remained at 1.17%, unchanged from the previous quarter. Forward-looking indicators showed the watch ratio (1.48%) and overdue ratio (1.41%) increased 2bp and 8bp respectively from year-end. Provision coverage ratio and loan loss provision ratio were 355.58% and 4.16% respectively, down 8 percentage points and 9bp from the previous quarter.
**Corporate Loans:** NPL ratio of 0.68%, down 36bp from year-end, with corporate NPL balance decreasing 900 million yuan, mainly due to manufacturing NPL ratio (0.58%) declining 89bp.
**Personal Loans:** NPL ratio of 2.04%, up 44bp from year-end, with personal NPL balance increasing 1.43 billion yuan, primarily due to personal business loan NPL ratio (2.46%) rising 79bp. Personal mortgage and other personal loan NPL ratios also increased.
The H1 2025 NPL formation rate (including write-offs) was 0.75%, down 14bp from 2024 annual level. Write-off scale was 2.2 billion yuan (vs. 2.5 billion yuan in H1 2024), while recovery of written-off loans was 1.8 billion yuan (vs. 700 million yuan in H1 2024). H1 2025 credit cost was 0.50%, down 24bp year-over-year.
**Investment Outlook**
Chongqing Rural Commercial Bank Co.,Ltd. is well-positioned to benefit from the Chengdu-Chongqing Economic Circle development. With accelerated credit growth and stable interest spreads, the bank continues to show improving fundamentals and offers compelling value among high-dividend banking stocks. The bank is expected to achieve net profit growth of 5.81%, 6.15%, and 6.67% for 2025-2027 respectively, maintaining a "Buy" rating.
**Risk Factors:** Macroeconomic downturn; consumption recovery falling short of expectations; asset quality deterioration exceeding expectations.
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