Strong performance growth cannot hide the slowdown in momentum; Wuxi Bank's net interest margin narrows in 2025, and capital adequacy ratio declines for three consecutive periods.

Securities Star Li Peng

As the first rural commercial bank listed on the main board of A-shares nationwide, Wuxi Bank (600908.SH)2 delivered an annual report in 2025 showing “scale expansion with slight profit growth.” The bank achieved double growth in operating income and net profit for the year, with total assets surpassing 280 billion yuan for the first time.

Securities Star notes that behind the impressive figures, issues have also emerged, including the continuous narrowing of the net interest margin that is squeezing profit space, pressure on year-by-year profit growth in a single quarter, a consecutive decline in the capital adequacy ratio, and the opposite movement in executive and employee compensation, among others. Coupled with potential risks in asset quality and slow business transformation, this regional benchmark bank is facing the difficult task of balancing scale growth and quality improvement, efficiency optimization and compliance governance.

Profitability structure under pressure; profit quality needs to be improved

The financial report shows that in 2025, Wuxi Bank’s revenue and net profit achieved slight year-on-year growth. However, the growth momentum was weak, exposing shortcomings in profit structure and growth quality, with the profitability of traditional deposit and loan businesses declining.

Looking at key core profitability indicators, a sharp narrowing of the net interest margin is the most prominent pressure. According to the annual report data, in 2025 the bank’s net interest margin was 1.35%, down 16 basis points from 1.51% in 2024; the net interest spread was 1.16%, down 11 basis points year-on-year.

As a result, interest net income—the core pillar of revenue—rose only slightly by 0.21% to 3.45 billion yuan. Growth was insufficient. With interest net income accounting for more than 70% of total revenue, the high dependence of profitability on the interest margin has led to insufficient overall growth momentum.

From quarterly performance, the problem of uneven profit growth becomes more prominent. In 2025, the first quarter recorded attributable net profit of 618 million yuan. In the third quarter, the quarter-on-quarter growth rate slowed, putting pressure on year-on-year profit growth in a single quarter. In the fourth quarter of 2025, the company’s single-quarter operating revenue was 1.054 billion yuan, down 4.23% year-on-year; single-quarter attributable net profit was 476 million yuan, down 2.0% year-on-year; and single-quarter net profit after deducting non-recurring items was 474 million yuan, down 1.29% year-on-year.

Concerns also exist in the growth of non-interest income. In 2025, Wuxi Bank’s non-interest net income maintained growth, but core fee and commission net income declined 4.02% year-on-year to 131 million yuan. Of this, agency business fees fell from 1.15 billion yuan in 2024 to 0.89 billion yuan, and the intermediary business’s revenue-generating capability continued to weaken.

Growth in non-interest income is highly dependent on investment income. For the full year, investment income was 1.253 billion yuan, up 25.51% year-on-year, becoming the main support for offsetting the decline in interest margin. However, investment income is susceptible to market fluctuations, and the stability of profitability is insufficient.

Profitability efficiency indicators also declined in tandem. In 2025, Wuxi Bank’s weighted average return on net assets was 10.05%, down 0.57 percentage points from 2024; the weighted average return on net assets after excluding non-recurring gains and losses was 10.02%, down 0.31 percentage points. Per-capita revenue was 2.6819 million yuan and per-capita profit was 1.2844 million yuan, down 0.63% and 0.18% year-on-year, respectively. Scale expansion has not effectively translated into an improvement in operating efficiency, showing the characteristics of “increasing quantity without increasing efficiency.”

In addition, as a core direction for bank transformation, Wuxi Bank’s personal loan business has declined for three consecutive years. By the end of 2025, the personal loan balance was 23.688 billion yuan, down about 5.02 billion yuan from the end of the prior year, continuing to decline since the peak in 2022. Among them, key retail businesses such as credit card overdrafts, personal housing loans, and personal consumption loans all declined to varying degrees.

Capital adequacy ratio continues to decline; risk coverage capacity weakens

While scale continues to expand, Wuxi Bank’s capital consumption accelerates, and potential risks in asset quality rise, showing signs of weakening risk-resistance capability. The foundation for long-term sound and steady operations is facing tests.

In terms of capital adequacy indicators, the annual report shows that as of the end of 2025, Wuxi Bank’s capital adequacy ratio fell to 13.83%, down 0.24 percentage points from the end of 2024 (14.07%); the tier 1 capital adequacy ratio was 12.12%, down 0.83 percentage points year-on-year; and the core tier 1 capital adequacy ratio was 11.84%. Although it is still above regulatory requirements, it has declined for three consecutive years.

The core reason for the decline in capital adequacy ratio is the continuing growth of risk-weighted assets driven by business expansion. In 2025, the bank’s outstanding loans totaled 170.629 billion yuan, net increasing by 140.09 billion yuan from the beginning of the year, an increase of 8.94%. Accelerated credit disbursement consumes core capital.

At the same time, in 2025 the bank redeemed 1.5 billion yuan of perpetual bonds, which exerted some drag on the tier 1 capital adequacy ratio and further intensified capital pressure. Although the current capital adequacy ratio still meets regulatory standards, the continuous downward trend implies that future room for business expansion will be limited. Without timely capital replenishment, credit disbursement and scale growth would be constrained, affecting long-term development potential.

In terms of asset quality, at the end of 2025 Wuxi Bank’s non-performing loan ratio was 0.77%, down 0.01 percentage points from the beginning of the year. It has declined for 9 consecutive years and has remained below 1% for 5 consecutive years. However, its risk coverage capacity has slightly weakened. At year-end, the allowance coverage ratio was 414.91%, down sharply by 42.69 percentage points from 457.60% in 2024; the loan loss reserve-to-loans ratio was 3.21%, down 36 basis points year-on-year.

The sharp decline in the allowance coverage ratio reflects the bank’s use of risk reserves to smooth profits or respond to potential losses, which compresses the space for risk buffers.

Regulatory penalties issued frequently; compensation polarization sparks governance controversy

In 2025, compliance issues at Wuxi Bank were somewhat exposed. The bank received regulatory penalties multiple times, and last year the compensation of executives and employees moved in opposite directions, drawing market attention.

On compliance: In June 2025, the Jiangsu Securities Regulatory Bureau’s inspection of Wuxi Bank’s fund sales business found four major violations: the fund sales system was not updated in a timely manner; some branch outlets had not set up operating licenses; newly distributed products had not been reviewed in compliance; and information reporting was missing. A warning letter was issued and the bank was ordered to submit a rectification report within 30 days.

In July 2025, the State Administration of Financial Regulation’s Wuxi Regulatory Division issued two administrative penalty decisions. Due to inadequate outsourced service management at the head office, the head office was fined 350,000 yuan; relevant responsible persons were warned. Due to inadequate bill business management at the Qianzhou branch, the branch was fined 300,000 yuan; the branch president was warned and fined 50,000 yuan.

It is worth noting that the financial report shows that in 2025, Wuxi Bank’s Chairman Tao Chang’s pre-tax compensation was 1.5902 million yuan, up 680,200 yuan from 910,000 yuan in 2024, an increase of 74.75%. The compensation of the president and Chief Compliance Officer Chen Hongmei was 1.9237 million yuan, up 324,500 yuan year-on-year, an increase of 20.3%. Vice President Shi Wei’s compensation saw an increase as high as 94.82%, and the compensation increases of multiple executives exceeded double digits.

In contrast, employee average compensation has declined for three consecutive years. From 2023 to 2025, Wuxi Bank’s average employee compensation was 470,900 yuan, 458,900 yuan, and 455,300 yuan, respectively. In 2025, it decreased by 3654 yuan compared with 2024, a year-on-year decline of 0.79%.

Against the backdrop of only slight growth in revenue and net profit, executives’ compensation rose sharply while grassroots employees’ compensation continued to fall, prompting market discussion about the reasonableness of its compensation decisions and fairness in internal governance.

Overall, in 2025 Wuxi Bank achieved “double growth” in both scale and profit, but issues related to growth quality, compliance governance, and business transformation cannot be ignored. In an environment of declining interest margins, tightening regulation, and intensifying competition, how Wuxi Bank will balance scale expansion with risk control, performance growth with compliance governance, and executive incentives with employees’ rights and interests will continue to put pressure on the bank. ( This article was first published by Securities Star, author | Li Peng )