Live Coverage of the Earnings Conference | "Changing the Path Dependence on Scale Benefits and Resource Investment," Qingdao Bank Management Responds to Hot Topics Such as Net Interest Margin, Dividend Distribution, and Asset Quality

China Business Journal Reporter | Li Yuwen China Business Journal Editor | Liao Dan

“In the new strategic period, we have come to realize that we must change the path dependency of the past regarding scale dividends and resource investment. We need to shift toward specialized, intelligent-digitalized, refined, and systematized development to build core competitiveness.” On April 2, Wu Xianming, president of Qingdao Bank, said at the bank’s 2025 annual performance briefing.

By the end of 2025, Qingdao Bank’s total assets exceeded RMB 800 billion to RMB 814.96 billion, up 18.12% year over year. In 2025, the bank recorded operating income of RMB 14.573 billion, up 7.97%; net profit attributable to shareholders of RMB 5.188 billion, up 21.66%.

Zhang Qiaowen, the secretary to the board of directors of Qingdao Bank, stated that for 2025, the bank plans to distribute RMB 1.8 in cash dividends for every 10 shares, with a total dividend amount of approximately RMB 1.048 billion. This is also the first time the bank’s annual dividend exceeds RMB 1 billion.

At the meeting, management also responded to hot-button issues such as net interest margin (NIM) control and reduction of non-performing assets.

“In January 2025, we started work on drafting the new three-year strategic plan, and it took us one year to basically complete the final draft.” Wu Xianming elaborated in detail, at the performance briefing, on the four strategic objectives in this plan.

The first is capacity-driven development. Relying solely on consuming capital and expanding scale makes it difficult to achieve long-term, high-quality development. Therefore, we plan to shift toward specialized, intelligent-digitalized, refined, and systematized construction to build core competitiveness and pursue a capacity-driven development model.

Second is organizational agility. “As a small and medium-sized bank, we hope to have agile, quick, and high-efficiency responses. This is an advantage we want to establish in competition with peers.” Wu Xianming also noted that with the development of artificial intelligence technology, Qingdao Bank’s existing organizational structure will change in the future.

Third is improvement in both quantity and quality. “In the new strategic period, we will continue to maintain a reasonable pace of growth in total assets, and achieve the target of exceeding RMB 1 trillion in total assets. At the same time, we will continue to maintain fairly strong profitability, with return on net assets (ROE) staying at a mid-to-upper level among listed urban commercial banks.”

Fourth is healthy and sustainable development. “We will firmly hold the ‘lifeline’ of asset quality, firmly establish the development philosophy of saving capital, vigorously develop intermediary business, and comprehensively promote a transition to a light-capital model. Only when risks are controllable and capital is used intensively can we get through the cycle and truly achieve healthy and sustainable development.”

In 2025, Qingdao Bank’s net interest margin was 1.66%, down 0.07 percentage points from the previous year.

“Against the backdrop of an overall downward trend in market interest rates and the policy objective of sharing benefits with the real economy, a narrowing of the net interest margin is also a common issue facing the banking industry at present.” Li Zhen guo, general manager of Qingdao Bank’s planned finance department, introduced that the bank will mainly take measures from several aspects to stabilize its net interest margin.

First is performance-based resource allocation. Emphasize the weight of indicators related to operating revenue and other benefits, and strengthen assessments of indicators such as the net interest spread between deposits and loans, the proportion of fee and commission income, and return on economic capital.

Second is asset management. Pay attention to structural optimization, increase the share of high-yield assets in interest-earning assets, increase loan disbursement, and promote growth in investment scale.

Third is liability management. Actively expand sources of deposits, encourage marketing such as low-cost peer-to-peer demand deposits, and increase the use of funds borrowed such as re-loans. At the same time, actively adjust pricing strategies, strengthen market-oriented adjustments to deposit interest rates, and do a good job in managing the cost ratio of liabilities.

Regarding the subsequent trend of the net interest margin and influencing factors, Li Zhen guo said that from the external environment, there is still some uncertainty. Loan demand remains relatively weak, and competition within the industry has intensified. The downward trend in loan interest rates and the low-level fluctuations in bond yields are expected to continue. The yield on the asset side will continue to decline, and the bank’s operations will still face pressure from a narrowing of the net interest margin. However, when looking at the overall trend of net interest margins for commercial banks, signs of the industry’s net interest margin stabilizing have already started to appear. Going forward, Qingdao Bank will continue to do a good job in net interest margin management and maintain net interest margin performance that is better than peers.

According to Qingdao Bank’s 2025 profit distribution proposal, the bank will pay cash dividends of RMB 1.8 per 10 shares (including tax), with a distribution amount of approximately RMB 1.048 billion. This represents 21.15% of net profit attributable to ordinary shareholders of the parent company in the consolidated financial statements.

From the perspective of the dividend amount, this is the first time the bank’s total annual dividend exceeds RMB 1 billion, up 12.5% from the previous year.

Zhang Qiaowen said that since Qingdao Bank’s A-share listing in 2019, including cash dividends in 2025, the cumulative dividend amount has exceeded RMB 6.4 billion. The average dividend amount as a proportion of net profit attributable to ordinary shareholders is approximately 30.91%.

In general, a bank’s dividend decision needs to comprehensively consider many factors, including regulatory requirements, capital adequacy ratio levels, profitability, strategic planning, and shareholder returns. Among these, the capital adequacy ratio is one of the core regulatory indicators for the banking industry. At the end of 2025, Qingdao Bank’s capital adequacy ratio was 13.37%, and its core tier-one capital adequacy ratio was 8.67%, with both down year over year.

Zhang Qiaowen mentioned that in recent years, Qingdao Bank has put a lot of effort into capital management. The new three-year strategic plan clearly states that it will continue to increase support for the real economy, and maintain improvements in business scale growth, profitability, and risk-resilience capacity. “All of these require more sufficient capital as support. At present, there are still some restrictions on external capital replenishment, so the importance of internal capital replenishment for Qingdao Bank is even more prominent.”

Zhang Qiaowen said that the bank is also working to build a stable, timely, and sustainable investment return mechanism. “Through our articles of association and shareholder return plan, we commit to investors that each year, we will distribute to ordinary shareholders by cash a profit that is not less than 20% of the distributable profit attributable to our ordinary shareholders for that year.”

By the end of 2025, Qingdao Bank’s non-performing loan ratio was 0.97%, down 0.17 percentage points from the end of the previous year. “Non-performing ratios have declined for eight consecutive years,” Zhang Qiaowen said when introducing performance.

Qingdao Bank’s vice president Zhang Meng introduced the bank’s measures for controlling asset quality, including strengthening substantive risk management, optimizing post-credit-grant management systems, and deepening the construction of risk monitoring systems.

Zhang Meng also responded to the asset quality issues related to the bank’s corporate real estate loans. By the end of 2025, Qingdao Bank’s corporate real estate loans were approximately RMB 23.7 billion. The overall non-performing loan ratio for corporate real estate was 1.61%, down 0.46 percentage points from the end of the previous year. The amount of non-performing assets was approximately RMB 382 million, down RMB 95 million from the end of the previous year. “Our corporate real estate loan proportion is relatively small—less than 6% of total loans—so it has a limited impact on the overall asset quality of loan assets. In 2025, we did not add any new non-performing loans in corporate real estate.”

Cover image source: China Business News (The Economic Daily)

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