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

Each Daily Reporter: Li Yuwen | Each Daily Editor: Liao Dan

“In the new strategic period, we recognize that we must change the path dependency of the past regarding scale dividends and resource investment. We will shift to specialized, data-intelligent (digital-and-intelligent), refined, and system-based development to build our core competitiveness.” On April 2, Wu Ximing, president of Bank of Qingdao, said at the bank’s 2025 annual performance briefing.

As of the end of 2025, Bank of Qingdao’s total assets exceeded RMB 800 billion to RMB 814.9 billion, up 18.12% year over year. In 2025, the bank achieved operating income of RMB 14.57B, up 7.97%; and attributable net profit to shareholders of RMB 5.19B, up 21.66%.

Zhang Qiaowen, the board secretary of Bank of Qingdao, said that for 2025, the bank plans to distribute RMB 1.8 in cash dividends for every 10 shares, for a total dividend amount of approximately RMB 1.05B. 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) management and reduction of non-performing assets.

The new strategic period will achieve the goal of crossing RMB 1 trillion in total assets

“Back in January 2025, we started working on the formulation of our new three-year strategic plan, and it took us one year to basically complete the finalized draft.” At the performance briefing, Wu Ximing detailed the four strategic objectives in the plan.

The first is capability-driven development. Relying solely on consuming capital and expanding scale makes it difficult to achieve long-term, high-quality development. Therefore, the bank considers shifting to specialized, data-intelligent (digital-and-intelligent), refined, and system-based development to build core competitiveness and pursue a capability-driven development model.

The second is organizational agility. “As a small and medium-sized bank, we hope to have agility, fast and high-efficiency responses—this is the advantage we want to build in competition with peers.” Wu Ximing also noted that with the development of artificial intelligence technology, Bank of Qingdao’s current organizational structure will change in the future.

The third is improvement in both quantity and quality. “In the new strategic period, we will continue to maintain a reasonable growth pace of total assets, achieving the goal of exceeding RMB 1 trillion, and we will also continue to maintain sound profitability. Return on net assets will remain at a level in the middle-to-upper range among listed city commercial banks.”

The fourth is healthy and sustainable development. “We will resolutely hold the life line of asset quality, firmly establish a development philosophy of saving capital, vigorously develop fee-based intermediary business, and comprehensively promote a light-capital transformation. Only with risk under control and capital intensive deployment can we get through the cycle and truly achieve healthy and sustainable development.”

Take multiple measures to stabilize NIM, and strengthen performance assessments such as loan-deposit spread and fee income proportion

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

“Against the backdrop of an overall decline in market interest rates and policies of sharing benefits with the real economy, the narrowing of the interest margin is also a common issue faced by the banking industry at present.” Li Zhen’guo, general manager of Bank of Qingdao’s planned finance department, said that the bank will take measures primarily from several aspects to stabilize NIM.

First, assessment of resource allocation. Highlight the weight of performance indicators such as operating revenue and strengthen the assessment of indicators including the loan-deposit spread, fee income proportion, and return on economic capital.

Second, asset management. Put emphasis on optimizing the structure, increase the share of high-yield assets in interest-earning assets, intensify loan origination, and advance growth in investment scale.

Third, liability management. Actively expand sources of deposits, encourage marketing of low-cost demand deposits from peer institutions and the like, and increase utilization of funds such as re-lending. At the same time, actively adjust pricing strategies, strengthen market-oriented adjustments to deposit interest rates, and do a good job controlling the cost ratio of liabilities.

Regarding the subsequent trend of NIM and influencing factors, Li Zhen’guo said that from the external environment, there is still a certain degree of uncertainty. Loan demand remains relatively weak, and competition within the industry is intensifying. The situation in which loan interest rates continue to move downward and bond yields continue to fluctuate at low levels will persist. On the asset side, the yield is expected to continue falling, and bank operations will still face pressure from further NIM narrowing. However, based on the overall trend of net interest margins across commercial banks, signs that the industry’s NIM may stabilize have already begun to appear. Going forward, Bank of Qingdao will continue to focus on NIM management and maintain NIM performance that is better than peers.

Cumulative cash dividends since listing on the A-share market exceed RMB 6.4 billion

According to Bank of Qingdao’s 2025 profit distribution proposal, the bank will distribute RMB 1.8 in cash dividends for every 10 shares (including tax), with a total distribution amount of approximately RMB 1.05B, accounting for 21.15% of net profit attributable to ordinary shareholders in the consolidated financial statements.

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

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

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

Zhang Qiaowen noted that in recent years, Bank of Qingdao has put significant effort into capital management. The new three-year strategic plan clearly states that the bank will continue to increase support for the real economy and maintain improvements in business scale growth, profitability, and risk resilience. “All of this needs more sufficient capital as support. At present, there are some limitations on external capital replenishment, so the importance of internal capital replenishment for Bank of Qingdao becomes 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 plans, we commit to investors that each year we will distribute profits to ordinary shareholders in cash in an amount not less than 20% of the distributable profits attributable to our ordinary shareholders for that year.”

Non-performing loan ratio declines for eight consecutive years

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

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

Zhang Meng also responded to issues concerning asset quality in the bank’s corporate real estate exposure. As of the end of 2025, Bank of Qingdao’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 non-performing loan balance was approximately RMB 382 million, down RMB 95 million from the end of the previous year. “Our corporate real estate loan exposure proportion is relatively small, at less than 6% of all loans, so it has a limited impact on the overall loan asset quality. In 2025, we did not add any non-performing loans in our corporate real estate loan portfolio.”

Cover image source: The Economic Daily News