Revenue and net profit both decline. Why has Huaxia Bank's performance growth momentum come to a halt?

Ask AI · How does a provisioning coverage ratio below the industry affect risk mitigation?

Huaxia Bank’s revenue last year decreased by 5.39% year-on-year, and net profit attributable to the parent decreased by 1.72%. The bank’s non-performing loan ratio slightly declined at year-end, but the provisioning coverage ratio also decreased.

Investment Time Network, Punctuation Finance Researcher Tian Wenhui

Huaxia Bank Co., Ltd. (hereinafter referred to as Huaxia Bank, 600015.SH) saw its consecutive years of net profit growth come to an abrupt halt in 2025, with both revenue and net profit attributable to the parent declining that year.

According to Huaxia Bank’s recently released 2025 annual report, the bank’s operating income decreased by 5.39% year-on-year to 91.91B yuan, and net profit attributable to the parent decreased by 1.72% to 27.2 billion yuan, mainly due to a 29.96% year-on-year decline in investment income and fair value change gains and losses. Meanwhile, commercial banks’ net profit grew by 2.33% year-on-year during the same period.

In terms of asset quality, at the end of 2025, Huaxia Bank’s non-performing loan ratio was 1.55%, down 0.05 percentage points year-on-year, but the provisioning coverage ratio was 143.30%, lower than the industry, decreasing by 18.59 percentage points year-on-year. Objectively, a decline in the provisioning coverage ratio can release profits but weakens risk offsetting capacity.

Investment Time Network, Punctuation Finance Researcher sent a communication outline to Huaxia Bank regarding the above performance decline and the decrease in provisioning coverage ratio, but had not received a reply as of the time of publication.

Both revenue and net profit declined

Huaxia Bank’s revenue and net profit both declined last year.

In 2025, Huaxia Bank’s operating income was 16.54B yuan, down 5.39% year-on-year; net profit attributable to the parent was 27.2 billion yuan, down 1.72%, with a growth rate lower than the 2.33% year-on-year growth of commercial banks during the same period. The main reason was that non-interest net income was 3.54B yuan, down 17.44% year-on-year.

From 2022 to 2024, the bank’s revenue growth rates were -2.15%, -0.64%, and 4.23%, respectively; net profit attributable to the parent grew by 6.37%, 5.30%, and 4.98%, respectively.

The decline in Huaxia Bank’s non-interest net income in 2025 was mainly due to a 29.96% year-on-year decrease in the total of investment income and fair value change gains and losses, which amounted to 7.91B yuan. Among them, investment income increased by 27.85% year-on-year; fair value change gains and losses were -11.45B yuan, compared to 39.89B yuan the previous year, a decrease of 1.97B yuan year-on-year. The shift from profit to loss in fair value change gains and losses has become the biggest factor dragging down industry performance, mainly caused by fluctuations in the fair value of trading financial assets due to capital market volatility.

In 2025, Huaxia Bank’s non-interest net income’s fee and commission income increased by 2.44% year-on-year, but fee and commission income from bank card business decreased by 12.04% year-on-year.

At the end of 2025, Huaxia Bank’s credit card loan balance decreased by 10.75% year-on-year. The total transaction amount of credit cards also decreased by 14.29%, leading to a 15.65% decline in credit card business income.

In 2025, Huaxia Bank’s net interest income increased by 1.43% year-on-year. However, the net interest margin was 1.56%, down 0.03 percentage points year-on-year. The yield on assets declined mainly due to insufficient effective demand for loans, falling interest rates, and the reduction in mortgage rates on existing housing loans last year.

Huaxia Bank stated that it will continue to intensify efforts to optimize the asset-liability structure, strengthen forward-looking management, dynamic management, and refined management, and make every effort to stabilize net interest margin.

Rapid decline in provisioning coverage ratio

Huaxia Bank’s overall non-performing loan ratio slightly declined last year, but the non-performing loan ratio for personal loans increased, and the provisioning coverage ratio was significantly below the industry average.

At the end of 2025, Huaxia Bank’s non-performing loan ratio was 1.55%, down 0.05 percentage points year-on-year. The provisioning coverage ratio was 143.30%, down 18.59 percentage points year-on-year, lower than the 205.21% ratio of commercial banks and 207.2% of joint-stock commercial banks during the same period.

According to the “Management Measures for Loan Loss Provisioning of Commercial Banks,” the provisioning coverage ratio is the ratio of loan loss provisions to the balance of non-performing loans. At the end of 2025, Huaxia Bank’s non-performing loans amounted to 57.15B yuan, an increase of 4.22B yuan year-on-year. The loan loss reserve balance was 22.73B yuan, a decrease of 32.78B yuan year-on-year.

The decrease in the loan loss reserve balance was mainly due to a provision of 22.726 billion yuan for loan losses in 2025, which was 1.203 billion yuan less than the previous year, and the write-offs and transfers of loan loss reserves totaling 32.783 billion yuan, an increase of 7.73% year-on-year.

The amount of loan loss provisions corresponds to the main component of credit impairment losses in the income statement. The reduction in loan impairment losses led to an 11.96% decrease in credit impairment losses overall. Since credit impairment losses are a major item of operating expenses, the bank’s operating expenses also decreased by 5.85% year-on-year. The reduction in operating expenses objectively increased net profit.

In other words, the decline in the provisioning coverage ratio objectively released profits. However, even so, Huaxia Bank’s net profit still declined year-on-year in 2025.

Meanwhile, although Huaxia Bank’s overall non-performing loan ratio slightly declined, the non-performing loan ratio for personal loans increased to 2.11%, up 0.31 percentage points year-on-year. Non-performing loan ratios for manufacturing, wholesale and retail, and construction industries also increased year-on-year.

In terms of capital adequacy ratio, at the end of 2025, Huaxia Bank’s capital adequacy ratio and core Tier 1 capital adequacy ratio were 13.16% and 9.38%, respectively, down 0.28 and 0.39 percentage points year-on-year.

Huaxia Bank’s net profit attributable to the parent in recent years (YoY growth)

Data source: Huaxia Bank Annual Report

Investment keywords: Huaxia Bank (600015.SH)

Author statement: Personal opinions only, for reference purposes