Recently, Wuxi Xishang Bank Co., Ltd. (hereinafter referred to as "Xishang Bank") has drawn significant industry attention due to issues surrounding its cross-regional lending activities. The matter came to light after a dispute between the bank and Mr. Li, a citizen from Heilongjiang province, who had taken out a loan through an online lending platform, culminated in a court case. Although the court's final ruling upheld the validity of the loan agreement, the National Financial Regulatory Administration's Wuxi Bureau confirmed that the bank had engaged in违规跨区域放贷行为 (violated regulations by lending across regions).
Established in 2019, Xishang Bank had previously seen its net profit surge over 42-fold within five years, yet 2024 marked a turning point. Operationally, the bank's heavy reliance on an internet lending model, heavily dependent on partnerships with loan facilitation agencies, had once propelled its net interest margin to exceptional heights and served as a key driver behind its performance. However, against the backdrop of new loan facilitation regulations taking effect, Xishang Bank has now been formally summoned by regulators over its cross-regional lending practices. This privately-owned bank, initially positioned to focus on tech-enabled inclusive finance and differentiated development, now finds itself at a crossroads, torn between scaling its operations and undergoing a compliance-driven transformation.
Xishang Bank, approved for establishment in 2019 by the former China Banking and Insurance Regulatory Commission and officially commencing operations in 2020, is the second private bank in Jiangsu province. It was initiated by local private enterprises, including Hongdou Group, and is positioned as a regional corporate bank serving small, medium, and micro enterprises as well as individual customers. As its business expanded, the bank's asset level grew substantially, skyrocketing from RMB 12.301 billion in 2020 to RMB 36.971 billion by the end of 2024, representing a growth of 200.55% over four years.
In its initial years of operation, Xishang Bank's business scale was modest. For the full year of 2020, it reported operating revenue of RMB 160 million and a net profit of RMB 9.8 million, indicating it was still in a market cultivation phase. As its internet loan cooperation model rapidly expanded, the bank's revenue leaped to RMB 770 million in 2021, a year-on-year increase of 381.25%; its net profit simultaneously soared to RMB 138 million, marking a staggering increase of 1308.16% and demonstrating formidable growth momentum.
In 2022, Xishang Bank continued its expansion trend, with operating revenue further increasing to RMB 1.007 billion, up 30.78% year-on-year; net profit reached RMB 267 million, a growth of 93.48%. During this phase, by collaborating with multiple loan facilitation platforms, the bank made online personal consumer loans its core growth engine, driving rapid asset scale expansion.
Entering 2023, Xishang Bank's growth reached a阶段性高点 (stage high). Full-year operating revenue was recorded at RMB 1.617 billion, an increase of 60.58% over the previous year; net profit rose to RMB 387 million, up 44.94% year-on-year. By this time, Xishang Bank had become one of the private banks with faster asset growth in Jiangsu province, establishing a初步 market presence among similar institutions.
However, a noticeable shift occurred in Xishang Bank's operating situation upon entering 2024. Its annual operating revenue fell to RMB 1.188 billion, a year-on-year decline of 26.53%, marking the first annual negative growth since its inception. Although net profit still saw a slight increase to RMB 420 million, up 8.53% year-on-year, the growth rate had slowed significantly. Compared to the annual profit growth rates frequently exceeding 40% from 2021 to 2023, its growth momentum had noticeably weakened.
It is noteworthy that revenue and profit trends diverged in 2024. Despite revenue falling by over a quarter, net profit continued to increase marginally, revealing the fragility emerging from its reliance on a single business model. Against the backdrop of tightening regulations and restrictions on loan facilitation partnerships, the bank's ability to stabilize revenue sources and optimize its profit structure will be a critical test for its sustainable development.
Beyond performance concerns, Xishang Bank has also exhibited volatility in its asset quality. Although its non-performing loan (NPL) ratio remained at an extremely low level initially due to its short operating history, it gradually increased in subsequent years as the bank's business scale expanded rapidly. Between 2020 and 2024, the bank's NPL ratio climbed from 0.01% to 1.25%, indicating growing challenges to asset quality.
Specifically, during the 2020-2022 period, Xishang Bank's NPL ratios were 0.01%, 0.34%, and 0.82% respectively, showing a consecutive upward trend for three years. This was closely related to the bank's rapid market expansion, particularly in personal consumer loan business. Although the NPL ratio slightly decreased to 0.68% in 2023, it remained significantly higher than the level at its inception. Entering 2024, the NPL ratio rebounded again to 1.25%.
Concurrently, Xishang Bank's provision coverage ratio also experienced considerable fluctuation. In 2020, as a newly established bank, its provision coverage ratio was as high as 8312.57%. This figure dropped sharply in the following years, falling to 734.66% in 2021, declining further to 309.92% in 2022, recovering somewhat to 419.91% in 2023, but falling again to 241.83% in 2024.
The changes in the provision coverage ratio not only reflect shifts in the bank's attitude towards risk but also indirectly impact its financial performance. A lower provision coverage ratio means the bank is less prepared for potential future losses, increasing pressure to handle unexpected situations.
Despite facing pressure on asset quality, Xishang Bank has demonstrated outstanding performance in terms of net interest margin (NIM). According to data from the National Financial Regulatory Administration, the overall NIM for Chinese commercial banks dropped to 1.52% at the end of 2024, while Xishang Bank led the pack with a NIM of 5.85%, far exceeding the industry average. Particularly among private banks, Xishang Bank's NIM ranked among the highest, significantly outstripping other similar institutions.
Looking back over recent years, Xishang Bank's NIM has consistently maintained a high level within the industry. From 2020 to 2023, the bank's NIM was 4.53%, 5.6%, 5.85%, and 6.39% respectively, continuously leading among private banks.
Entering 2024, Xishang Bank's NIM remained high at 5.85%, far exceeding the 4.11% average for private banks and the 1.52% overall banking industry level. However, in the current context of heightened economic uncertainty, balancing returns and risks has become an urgent issue for Xishang Bank to address.
The primary reason for Xishang Bank's long-standing领先 (leading) net interest margin is its heavy reliance on high-priced personal consumer loans, essentially trading risk premium for returns.
In terms of business structure, Xishang Bank has long been heavily skewed towards personal loans. As of the end of 2024, the bank's total loan balance was RMB 28.95 billion, of which retail loans (i.e., personal loan balance) amounted to RMB 22.657 billion, accounting for 78.26%; corporate loans were only RMB 6.294 billion, constituting 21.74%.
This structural characteristic is not a short-term phenomenon. Looking back from 2020 to 2023, the proportion of personal loans in Xishang Bank's total loan portfolio was 81.83%, 86.82%, 80.39%, and 75.17% respectively. Although showing a slow declining trend, personal loans have consistently held absolute dominance. In absolute terms, the retail loan balance in 2024 still grew by over 20% year-on-year, indicating that the pace of expansion has not slowed.
Within the retail loan segment, personal consumer loans form the core pillar. A rating report from United Credit Ratings shows that as of the end of June for 2020-2022, Xishang Bank's personal consumer loan balances were RMB 4.519 billion, RMB 12.446 billion, and RMB 14.358 billion respectively, accounting for 69.63%, 74.95%, and 75.41% of total loans. This high-interest-spread asset has been key to supporting its long-term领先 (leading) net interest margin.
To rapidly acquire customers and expand scale, Xishang Bank widely relies on external loan facilitation platforms. According to the latest statistics, the bank collaborates with 46 loan facilitation or credit enhancement institutions. These include 21 online lending platform operators, such as iQiyi, Jike Group, Wanda Finance, 51 Credit Card (Vala), Dewu Financial, and 58 Digital Technology, as well as 25 credit enhancement service providers, including Ping An Puhui Financing Guarantee, Tianjin Wanda Financing Guarantee, and Chongqing Oucheng Financing Guarantee.
Through the internet lending model, Xishang Bank channels funds to numerous locations across the country, effectively bypassing regulatory restrictions that prohibit regional corporate banks from operating across regions. In recent years, regulators have continuously strengthened operational norms for regional corporate banks, strictly controlling their cross-regional operations. In April 2024, a certain private bank was fined RMB 700,000 by regulators for failing to adequately implement监管要求 (regulatory requirements) prohibiting cross-regional operations and for serious violations of prudent operating rules, among other违规行为 (violations).
In the case involving Xishang Bank and Mr. Li from Heilongjiang, the Wuxi Financial Regulatory Bureau, in an information disclosure response in October 2025, confirmed that the bank "did not determine whether Mr. Li was an out-of-region customer," constituting a violation. The bureau summoned Chairman Li Jun and President Xi Guoguang on October 23, reiterating the principle of operating within the designated region.
Beyond the cross-regional lending issue, these partners of Xishang Bank often add additional fees such as guarantee fees and service fees to loans, further pushing up borrowing costs for customers and generating numerous complaints for Xishang Bank.
Currently, Xishang Bank alone has accumulated over 3,700 complaints on the Hei Mao投诉 (Black Cat Complaints) platform. Some users on the platform reported borrowing RMB 4,000 through "Xi Xi Dai" with an annualized interest rate as high as 36%, which included a substantial guarantee fee of RMB 624.24.
Furthermore, many of Xishang Bank's aforementioned partners themselves face a high volume of complaints. For instance, Jike Group, a major player in medical aesthetic installment loans, has over 6,000 complaints and has been accused of违规催收 (improper debt collection practices) in its cooperation with Xishang Bank.
However, such high comprehensive fee rates appear to be reaching a dead end. The "New Loan Facilitation Regulations," which officially took effect in October 2025, explicitly require that banks, as the lending entities, must assume management responsibility, and the comprehensive annualized cost of borrowing (including interest, guarantee fees, consultation fees, etc.) must not exceed 24%. This directly challenges the profit logic currently relied upon by Xishang Bank, which uses high pricing to cover risks.
Simultaneously, regulatory requirements mandate that commercial banks strengthen the management of their partners, enforce strict准入和审批 (screening and approval processes), and promptly adjust their partner lists. Regarding post-loan collection management for internet-assisted lending businesses, banks must promptly correct any违规催收行为 (improper collection practices) discovered; for serious cases, measures such as terminating cooperation should be taken. For Xishang Bank, this means it must strictly control risks associated with partner institutions and remain highly vigilant towards collection behaviors like those mentioned above involving Ji Fenqi (under Jike Group).
Overall, against the backdrop of持续收紧 (continuously tightening) regulations, pressure on the loan facilitation model, and increased volatility in asset quality, Xishang Bank is facing a critical window for transitioning from scale-driven growth to compliance-oriented stability. If it fails to promptly adjust its business structure, which is overly reliant on high-interest personal loans, and genuinely return to its roots of operating within its designated region, the rapid growth trajectory it once enjoyed may be难以维持 (difficult to sustain).
