Industry data reveals a persistent "K-shaped divergence" in banking sector net profits. In the first half of the year, China's banking institutions generated approximately 1.24 trillion yuan in cumulative net profit, a slight 0.6% year-on-year decline. Among them, large state-owned banks saw net profit growth of 1.58%, joint-stock banks experienced a 3.42% decrease, rural commercial banks dropped 12.56%, while city commercial banks recorded a 7.41% increase. Against the backdrop of declining industry-wide net profits, city commercial banks emerged as one of the few segments bucking the trend, with Bank of Chongqing (ASX: BCQ) once again leading the pack.
On Thursday evening, Bank of Chongqing (ASX: BCQ) released its half-year report, posting a 10.79% year-on-year increase in operating revenue and a 10.97% rise in net profit. The trajectory from an overall industry profit decline, to 7.41% growth for city commercial banks, to 10.97% for Bank of Chongqing highlights the pronounced "K-shaped" divergence across the sector. This divergence is not merely a matter of directional differences but reflects the varying operational quality of individual banks. Six key dimensions of this leading city commercial bank's half-year report warrant attention.
Consistent Double-Digit Growth for Four Consecutive Quarters, Unique Among A-Share Listed Banks
By balancing revenue and costs, the bank has achieved strong operational efficiency. Both operating revenue and net profit have maintained "double 10%" growth for four consecutive quarters, with the first quarter even reaching "double 11%" growth—a feat unmatched among the 42 A-share listed banks. This sustained growth is well-supported. As of the end of June, the group's total assets stood at 1,108.909 billion yuan, an increase of 75.183 billion yuan or 7.27% from the start of the year. On a legal entity basis, total assets reached 1,042.818 billion yuan, up 66.934 billion yuan or 6.86%, with both measures surpassing the trillion-yuan threshold. Additionally, the annualized weighted average return on equity improved to 12.03%, up 0.51 percentage points year-on-year. In an environment where the industry's net interest margin stands at only 1.41%, the simultaneous improvement in net profit and ROE indicates that capital return efficiency is entering a new upward trajectory. This performance is not the result of short-term pushes or financial adjustments through provisioning but stems from sustained improvements in operational and capital efficiency.
Net Interest Margin Rebounds Against the Trend, Leading the Improvement
In the first half, the net interest margin for China's banking institutions was 1.41%, up 1 basis point from the first quarter, marking the first quarterly sequential rebound since 2022. The city commercial bank segment saw its net interest margin rise 2 basis points sequentially to 1.40%. Bank of Chongqing's net interest yield increased by 7 basis points year-on-year to 1.46%, while its net interest spread rose 5 basis points to 1.40%. The rebound in net interest yield was seven times the industry average and 3.5 times the average for city commercial banks. Improved liability costs provided crucial support. During the first half, the bank's corporate deposit interest rate fell 41 basis points from the start of the year, and the average cost of personal time deposits declined from 2.86% to 2.39%. At a time when the industry is still striving to maintain net interest margins above 1.4%, a city commercial bank achieving a 7-basis-point year-on-year increase in net interest yield to 1.46% is a notable accomplishment.
Top Rankings in Both Loan and Corporate Deposit Growth in Chongqing
The report shows that Bank of Chongqing's total loans reached 582.459 billion yuan, an increase of 51.175 billion yuan or 9.63% from the start of the year, ranking first in incremental loan balances in Chongqing. On the deposit side, total deposits amounted to 627.202 billion yuan, up 61.498 billion yuan or 10.87%. Specifically, the increase in corporate deposit balances has ranked first in Chongqing for two consecutive years, while savings deposit growth has ranked second for the same period. Credit allocation is closely aligned with regional strategies and the real economy. In the first half, the bank's financing balance for the Chengdu-Chongqing Economic Circle grew 14.6% from the start of the year, financing for the New Western Land-Sea Corridor rose 9.3%, loans to tech enterprises increased 27.3%, and manufacturing loans grew 13%. More importantly, deposit growth outpaced loan growth, indicating an expanding deposit base. With liquidity coverage ratios well above regulatory standards, the bank's development has not come at the expense of safety, efficiently channeling deposits into the real economy.
Inclusive Small and Micro Loans Rank First Among Western Region Listed City Commercial Banks
According to a notice from the Chongqing Financial Regulatory Bureau on 2025 evaluations of small and micro enterprise financial services, Bank of Chongqing received the highest rating of "Level One," making it the only local corporate bank in Chongqing to achieve this rating for seven consecutive years. As of the end of June, the bank's small and micro enterprise loan balance stood at 232.500 billion yuan, with inclusive small and micro loans at 77.647 billion yuan, maintaining the top position among listed city commercial banks in the western region. During the same period, the non-performing loan ratio and attention ratio for inclusive small and micro loans continued to decline from end-2025 levels, with the NPL formation rate hitting a three-year low. Amid pressure from large banks expanding downward and challenges in inclusive finance for smaller banks, the "bank for small and micro enterprises" label is becoming a moat for Bank of Chongqing to navigate economic cycles.
NPL Ratio of 1.11%, Significantly Below National City Commercial Bank Average
As of the end of June, the NPL ratio for all commercial banks nationwide was 1.52%, and 1.87% for the city commercial bank segment. Bank of Chongqing's NPL ratio stood at 1.11%, 41 basis points lower than the national average and 76 basis points lower than the city commercial bank average, representing less than 60% of the latter. The trend is equally important. The bank's NPL ratio has improved quarter by quarter, hitting a near four-year low by the end of June. Under the five-tier classification, the proportion of special-mention loans was 1.81%, down 0.13 percentage points from the start of the year. The ratio of NPLs to loans overdue by more than 90 days was 1.16, indicating proactive risk identification rather than passive recognition after 90 days of delinquency. Additionally, the provision coverage ratio reached 247.31%, 44 percentage points above the national average and 76 percentage points above the city commercial bank average. The simultaneous occurrence of asset expansion, risk reduction, and a thicker safety cushion is rare in today's banking environment.
Four Consecutive Years of Positive Shareholder Returns
Among the 42 A-share listed banks, only 8 have delivered positive returns for four consecutive years, and Bank of Chongqing is one of them. In 2025, the bank's A-share price rose 21.64%, ranking fourth among the 42 A-share listed banks and second among 17 listed city commercial banks. Its H-share price climbed 37.26%, placing sixth among 30 Hong Kong-listed mainland banks. In terms of shareholder returns, the bank distributed 1.599 billion yuan in cash dividends for 2025, maintaining a payout ratio of 30%. Since its return to the A-share market, the cash dividend ratio has remained stable at 30%, sustaining a high and consistent payout level for five consecutive years. On the institutional front, several brokerages including CITIC Securities, China Merchants Securities, Zhongtai Securities, Guotai Haitong Securities, Galaxy Securities, and Zheshang Securities have issued "Buy," "Overweight," "Recommend," or "Outperform" ratings this year.
While the market continues to debate where the bottom of net interest margins lies, Bank of Chongqing has used six key data points to illustrate a path of coordinated quality and efficiency amid the "K-shaped divergence." The yardstick for evaluating a bank is no longer just the scale of assets, revenue, or profit, but whether growth is sustainable, pricing is resilient, lending is effective, risk is controllable, and returns are stable. From this perspective, the bank's half-year report is more than just a "double-digit growth" income statement—it is a testament to an operational performance defined by quality, resilience, and accountability.