After the "throne" of city commercial banks changed hands, Beijing Bank has not given up yet

Narrowing interest margins, weak balance sheet expansion, investment losses... As the cyclical and regional guillotine slowly descends, even the once top city commercial bank is powerless to resist.

In the first three quarters, Bank of Beijing delivered a mediocre performance:

Operating income and net profit attributable to shareholders were RMB 51.588 billion and RMB 21.064 billion, respectively, with year-on-year growth rates of -1.08% and 0.26%, ranking 31st and 33rd among the 42 listed banks in A-shares, placing it at the lower end of the industry;

From the perspective of "volume, price, and risk" balance, although the net interest margin is still in a downward channel, the non-performing loan ratio has decreased by 0.02 percentage points from the beginning of the year to 1.29%, with a continuous decline over several quarters indicating that the bank's asset repair has made good progress.

Such results may not be bad for Bank of Beijing, which is still in the "deep water zone" of transformation;

However, the market's attention is generally focused on another topic—as the former top city commercial bank, Bank of Beijing has been surpassed by Jiangsu Bank in terms of revenue, profit, and assets across three dimensions.

Bank of Beijing is not insensitive to this surpassing; since the new chairman, Huo Xuewen, took office in 2022, the bank has initiated a series of reforms from business to strategy;

Since 2025, it has further intensified its efforts to move south and enhance regional collaboration, attempting to find a way out amid challenges.

Growth Again in a Dilemma

The performance climb of Bank of Beijing has become increasingly difficult.

In the third quarter of this year, the bank's revenue and net profit attributable to shareholders both declined year-on-year, with decreases of 5.71% and 1.85%, respectively.

The sharp drop in quarterly revenue dealt a heavy blow to Bank of Beijing, as the previously steadily rising profit once again entered a declining phase, causing the profit growth rate for the first three quarters to drop to 0.26%.

The balance sheet records the difficult efforts made by Bank of Beijing for performance growth.

In the first three quarters, Bank of Beijing maintained rapid balance sheet expansion, with total assets growing by 15.89% compared to the beginning of the year, ranking 3rd among A-share listed banks, second only to Jiangsu Bank and Chongqing Bank;

The difference is that the expansion of Jiangsu Bank and Chongqing Bank is driven by credit business, while Bank of Beijing's expansion relies on financial investments and interbank placements.

According to estimates, Bank of Beijing's loan growth rate in the first three quarters was only 7.53%, lagging behind the aforementioned two banks by more than 10 percentage points;

The growth rates of financial investments and interbank assets were 23.1% and 673.47%, significantly leading the overall asset growth of the company, with financial investment assets accounting for 36.2% of total assets;

This indicates that Bank of Beijing's business focus is shifting from traditional credit to trading and financial markets.

On one hand, this may stem from Bank of Beijing's weakness in credit expansion.

In recent years, the credit growth rate of commercial banks in the Beijing-Tianjin-Hebei region has generally been lower than that of the Yangtze River Delta, with Huaxia Bank, Bank of Beijing, and Beijing Rural Commercial Bank recording growth rates of 3.18%, 7.53%, and 2.1% in the first three quarters, far below the 10% growth of leading city commercial banks in the Yangtze River Delta; On the other hand, the lower capital adequacy ratio also requires Beijing Bank to allocate bonds with risk weights lower than loans (such as interest rate bonds).

As of the end of the third quarter, Beijing Bank's capital adequacy ratio was only 12.83%, although it is higher than the regulatory requirement of 8%, it is positioned in the lower middle of listed banks.

After 2019, many commercial banks supplemented their capital through methods such as convertible bonds, private placements, and rights issues. For example, Jiangsu Bank raised 20 billion yuan through the issuance of Su Yin convertible bonds and 14.8 billion yuan through rights issues between 2019 and 2020.

The last private placement by Beijing Bank was in 2017, and it only issued 20 billion yuan in perpetual bonds in 2025 to supplement its Tier 1 capital.

In the context of a slowdown in credit expansion, it is reasonable for Beijing Bank to seek diversified allocations to cope with the "asset shortage":

For example, traditional bonds can provide stable interest income while leaving a window for future capital gains;

Interbank deposits, although with low asset yields, have high liquidity and can optimize asset-liability management.

However, while enriching asset allocation, a large amount of bond purchases may lead to fair value being very sensitive to interest rate fluctuations. If interest rates turn upward, it may even lead to floating losses in the investment portfolio, eroding capital.

In the third quarter of 2025, the downward trend in long-term yields of interest rate bonds was significantly affected by factors such as the "anti-involution" policy and the strong stock market diverting funds.

The analysis team at China Merchants Securities pointed out that during this round of bond market adjustments, Beijing Bank's TPL (trading financial assets) account had significant floating losses in the third quarter. Coupled with the high base effect from the previous year, this has led to a year-on-year decline of 15.98% in other non-interest income for the quarter, dragging down net profit.

While investment income declined, Beijing Bank's net interest margin was also in a downward channel, with a net interest margin of 1.28% at the end of the third quarter, which not only positioned it in the lower middle of listed peers but also decreased by 0.03 percentage points from the end of the previous quarter.

It is estimated that Beijing Bank's net interest margin narrowed by 0.04 percentage points quarter-on-quarter in the third quarter. Although the interest-bearing negative growth cost rate decreased by 0.1 percentage points quarter-on-quarter, it still could not fully offset the downward pressure on the asset side.

Against the backdrop of narrowing interest margins and significant declines in other non-interest income, although Beijing Bank has reduced provision allocations, it still cannot stop the overall downward trend in profits.

However, from the core indicators of asset quality, we can still see Beijing Bank's efforts to control the situation:

First, the stock of non-performing loans has decreased, and asset quality remains stable, with a quarter-on-quarter decline of 0.01 percentage points to 1.29% at the end of the third quarter;

The analysis team at China Merchants Securities estimates that the non-performing loan generation rate for the first three quarters was 0.87%, a decrease of 0.08 percentage points compared to the first half of the year. While the trend of new non-performing loans has improved, the provision safety cushion has been solidified, and the overall asset quality trend is positive.

Second, the middle-income maintained double-digit high growth, with net fee and commission income in the first three quarters increasing by 16.92% year-on-year, outperforming peers;

The company actively expands wealth management business, with the scale of personal financial product sales exceeding the total increase for the previous year, effectively supporting high growth in middle-income.

In the first three quarters, the contribution rate of middle-income to revenue for Beijing Bank was 6.34%, which still has a considerable gap from becoming a revenue pillar.

"Facing the Challenge" in the Third Year

However, from the perspective of the competitive landscape in the banking industry, the biggest pressure on Beijing Bank does not come from short-term interest margin pressure or bond market losses, but from the fact that its current growth momentum can no longer withstand the fierce offensive from its peers in the Yangtze River Delta.

In recent years, although the banking industry has faced overall pressure, the performance of urban and rural commercial banks in the Yangtze River Delta has been outstanding, achieving rapid balance sheet expansion through business within the province and surrounding areas.

According to the data from the third quarterly report, Beijing Bank's 8.8% compound annual growth rate of net profit attributable to shareholders over the past three years ranks first in the Beijing-Tianjin-Hebei region;

However, during the same period, the growth rates of seven banks in the Yangtze River Delta, including Hangzhou Bank, Changshu Bank, and Jiangsu Bank, were all above 30%, with three banks achieving growth rates of 71.27%, 61.46%, and 56.82%, respectively.

It can be said that the profit growth rates of banks in the Beijing-Tianjin-Hebei region and the Yangtze River Delta are no longer on the same level, and the pressure of being surpassed is ever-present, prompting Beijing Bank to begin exploring transformation early on.

In 2022, Beijing Bank, whose revenue and profit figures and growth rates were both surpassed by Jiangsu Bank, welcomed its new chairman, Huo Xuewen, and under his leadership, initiated several key transformations:

First, it focused on "internal cultivation," enhancing the overall competitiveness of the company through digitalization while seeking new business focal points.

For example, at the end of 2022, Beijing Bank was the first in the industry to propose building the "first bank for specialized, refined, characteristic, and innovative enterprises," providing comprehensive financial services of "commercial banking + investment banking + private banking" and "financing + wisdom + business" for specialized and innovative enterprises;

As of June 30, 2025, the balance of technology financial loans at Beijing Bank reached 434.6 billion yuan, a 19% increase from the beginning of the year.

Promoting the construction of a child-friendly bank, relying on three major matrices of products, services, and ecology to create a dedicated service system for children, the number of child financial clients exceeded 2.38 million by the end of the third quarter.

While focusing on specialized businesses, Beijing Bank regards digital banking as a strategic priority.

In 2022, Beijing Bank clarified its strategy of "five major transformations" led by digital transformation (development model, business structure, customer structure, operational capability, management method), unifying the bank's data foundation, operating system, and risk control platform;

Now, the bank's digital transformation has entered the 2.0 phase, with "All in AI" established as the strategic consensus of the entire bank, building a "1213" artificial intelligence technology architecture to upgrade from infrastructure to business scenarios.

Second, it acknowledges regional dividends, seeking new development space in the south, and forming alliances with "brother" banks in the Beijing-Tianjin-Hebei region.

In 2022, Beijing Bank released the "Yangtze River Delta Integration Work Plan," clearly outlining the tasks and timetable for the next three years;

The following year, it proposed a new idea—to recreate a Beijing Bank in the Yangtze River Delta.

To implement the "recreation plan," Beijing Bank took a series of specific actions in institutional setup and resource allocation, and established a Yangtze River Delta regional approval center in 2025, adopting a parallel operation model with first-line operations to improve approval quality and efficiency.

While pushing forward the "recreation plan," the bank also reached a strategic cooperation agreement with Huaxia Bank and Beijing Rural Commercial Bank on the internal front in the main battlefield of Beijing.

In March 2025, Huaxia Bank, Beijing Bank, and Beijing Rural Commercial Bank signed a strategic cooperation agreement, focusing on technological innovation and the green low-carbon field Although the management of the three banks has not disclosed the details of their cooperation, they have all expressed support for the concept of "win-win cooperation":

Huo Xuewen from Beijing Bank stated that they will continue to deepen the construction of the "five characteristic banks" and strengthen the support of technology finance and green finance for high-precision industries and small and micro enterprises.

Xinfeng noted that in recent years, there has been frequent exchange of senior executives among the three "brother" banks:

For example, the current executive team of Huaxia Bank includes Chairman Yang Shujian, Vice President Tang Yiming, Chief Information Officer Gong Weihua, and Chief Risk Officer Fang Yi, all of whom come from Beijing Bank;

Beijing Bank's Vice President Mao Wenli comes from Beijing Rural Commercial Bank;

The Chairman of Beijing Rural Commercial Bank, Guan Wenjie, and Chief Information Officer Yi Yongfeng both come from Huaxia Bank.

Currently, the strategic cooperation direction of the three banks remains focused on technology, green, and small micro fields, but the intensive interaction among the management may indicate that the "three brothers" have a deeper penetration into the Beijing-Tianjin-Hebei market, and their strategic synergy far exceeds that of their peers, making their alliance even more solid.

Based on the above strategies, it may be clearer to understand Beijing Bank's current ambition—

In core business, "specialized, refined, distinctive, and innovative" enterprises are not only a characteristic of the Beijing area but are also widely distributed in the Yangtze River Delta region. Focusing on technology finance not only helps serve the Beijing-Tianjin-Hebei region but also enhances the company's competitiveness after moving south;

Forming an alliance with "brother banks" can avoid ineffective competition within the same region and concentrate the company's efforts to launch an attack on the prosperous Yangtze River Delta region.

However, as of now, Beijing Bank's southern expansion has not been smooth:

By the end of the first half of 2025, Beijing Bank's credit in the Yangtze River Delta region had increased by 10.66% compared to the beginning of the year, while the overall loan growth rates of Jiangsu Bank, Ningbo Bank, and Nanjing Bank were 16.38%, 13.47%, and 10.41%, respectively;

This means that Beijing Bank's expansion speed in the Yangtze River Delta region is still difficult to surpass that of local forces.

In the first half of 2025, the profit contribution rate of Beijing Bank in the Yangtze River Delta region increased from 6.15% in 2022 to 12.69%, while the revenue contribution rate decreased from 12.42% to 11.42%, and the asset scale proportion increased from 12.03% to 14.05%;

Reality proves that it is still far from the goal of "recreating a Beijing Bank."

The blueprint has been drawn, but there are still hidden reefs along the journey.

Currently, it seems that Beijing Bank's breakthrough in the south and regional synergy still face long and difficult roads, and whether its transformation can succeed remains to be seen over time