Inside the Largest Listed Rural Commercial Bank's Earnings Call: Assets Expected to Surpass 2 Trillion Yuan, Two Annual Dividends Maintained

On April 15, Chongqing Rural Commercial Bank (hereinafter referred to as "CQRC BANK"), the rural commercial bank with the largest asset base on the A-share market, held its 2025 earnings briefing.

This was the first earnings briefing since the approval of Liu Xiaojun's qualification as chairman in January 2026, and also his first annual report card since being elected chairman in April 2025.

At this CQRC BANK earnings briefing, Party Secretary and Chairman Liu Xiaojun, Party Committee Member and Vice President/Board Secretary Tan Bin, Party Committee Member and Vice President Zhang Jin, Senior Fintech Expert and General Manager of Digital Finance Department Zhang Hao, General Manager of Inclusive Finance Department Zhang Guoxi, General Manager of Corporate Finance Department Li Huan, General Manager of Financial Markets Department Tang Jidong, General Manager of Risk Management Department Wang Jing, and General Manager of Asset and Liability Management Department/Office of the Board Zhu Guochen all attended.

Core issues of concern to the market, including operating performance, dividend returns, and digital transformation, were deeply dissected.

Notably, regarding future financial goals, Liu Xiaojun provided clear guidance: it is expected that during the 14th Five-Year Plan period, the bank's asset scale will surpass 2 trillion yuan, net profits will exceed 15 billion yuan, non-performing loan ratios will be controlled at around 1%, and ROE will reach above 10%.

Enabling Frontline Staff to Directly "Call for Fire"

During this earnings briefing, Zhang Hao, General Manager of the Digital Finance Department, shared the story of CQRC BANK actively implementing technological reform.

Zhang Hao explained that to ensure technology truly aligns with business, CQRC BANK adopted a "7+6+N" model: 7 industry-technology integration centers, 6 support departments, and N cross-functional task forces for reform breakthroughs, building a new operational system that is interwoven and agile-efficient.

Zhang Hao used a vivid metaphor to describe the effectiveness of this mechanism: experts dispatched from technical departments embed themselves to front-load underlying technological capabilities, enabling rapid responses to the needs of industry-technology integration centers and business units. This allows frontline business staff to directly "call for fire" resources, breaking down traditional departmental walls.

This agile mechanism has yielded results. Zhang Hao noted that in the first quarter of this year, marketing expenses totaled 177 million yuan (compared to approximately 200 million yuan in previous years). Despite reduced expenses, the bank leveraged over 800 million yuan in consumption, achieving a leverage ratio of 4.64 times. It drove 110,000 merchants to achieve a total social retail sales volume of 21.2 billion yuan, reaching a leverage ratio of 119 times.

Transforming Traditional Branches into Customer Acquisition Channels

Liu Xiaojun shared the progress of three new momentum reform strategies.

On one hand, the bank is further exploring its distinctive advantages and natural endowments: retail, technology, county-level operations, and headquarters capabilities. On the other hand, reforms have been advanced to address pain points such as traditional business models, gaps with advanced peers in certain areas, and a low proportion of non-interest income.

For instance, as a financial institution deeply rooted in the local region, CQRC BANK operates 1,727 business outlets, ranking first among locally listed banks nationwide. Under the wave of digitalization, how to revitalize these massive offline assets is a key focus for the market.

"If not used well, traditional massive outlets become an operational burden; if used well, they become a 'multiplier' for customer acquisition and engagement," Liu Xiaojun stated bluntly at the meeting. The bank's solution is to adapt to local conditions and build a "community commercial ecosystem" covering the Chongqing municipal area.

In this ecosystem, the head office serves as an online dispatch center, while outlets transform into "ground promotion teams." The bank guides individual customers to merchant consumption; merchants offer discounts to customers; the bank does not charge high fees but instead exchanges them for settlements, deposits, and core data. "On one hand, we help merchants attract traffic; on the other, we benefit customers by embedding low-frequency financial services smoothly into high-frequency consumption scenarios."

Revamping Marketing Models

Beyond reshaping retail scenarios, CQRC BANK is attempting to break free from homogenized competition in corporate business through technology empowerment.

Liu Xiaojun introduced that in June 2025, the bank launched a fintech customer acquisition platform. It mapped out industrial chain enterprises like Chongqing's "33618" and pushed them directly to outlets for precise marketing. Since the platform's launch nine months ago, it has reached over 37,000 customers cumulatively, adding 12 billion yuan in credit lines.

Simultaneously, the bank connected over 55 million valid patents nationwide with enterprise clients. As of the end of March, it had facilitated 77 technology achievement transformation projects.

This provided new tools for relationship managers, moving away from the past "low-level" marketing model based solely on price competition.

From a scale perspective, corporate loans grew by 74.5 billion yuan compared to the beginning of 2025, contributing up to 90% of the incremental growth. Both the balance and incremental market share of corporate loans ranked first in the city, securing the bank's leading position in the regional market.

Aiming to Make Intermediary Business a New Profit Growth Point Within 2-3 Years

Addressing widespread market concerns about rising non-performing ratios in retail loans, CQRC BANK has also outlined clear response strategies.

Liu Xiaojun revealed that the bank is fully advancing the construction of a next-generation digital risk control system, delivering a "three reductions and one increase" performance report. The non-performing loan ratio has declined for five consecutive years, reaching 1.08% (the lowest since listing on the A-share market); the proportions of special mention and overdue loans have both decreased; and the provision coverage ratio increased to 367.26%, up 3.82 percentage points from the end of the previous year.

Furthermore, to cope with industry-wide interest margin compression, the bank is promoting a wealth management business transformation. In terms of organizational structure, most qualifying branches are required to establish new wealth management departments to coordinate wealth business development. Regarding personnel, professional wealth management teams have been built, including roles such as head office financial advisors. The assessment weight for intermediary income has been increased, aiming to develop intermediary business into a new profit growth point within 2-3 years.

Maintaining Current Model and Ratio of Two Annual Dividends

In response to questions on how to further enhance shareholder returns in the coming years, CQRC BANK Chairman Liu Xiaojun provided clear expectations.

He stated that since 2020, the bank's cash dividend ratio has remained above 30% of net profits, placing it in the upper-middle range among A-share listed banks. Additionally, it implemented its first interim dividend in 2024.

"Unless there are major changes, we will maintain the current 'two dividends per year' model and ratio," Liu Xiaojun clarified.

Explaining why the dividend ratio will not be significantly increased further, Liu noted that the bank's dividend ratio is already relatively high among peers. Moreover, since loans account for less than 50% of total assets, sufficient capital must be retained to meet regulatory requirements and increase credit issuance.

Net Interest Margin Declined by Only 1 Basis Point

Regarding the pressure from narrowing net interest margins in 2025, Tang Jidong, General Manager of the Financial Markets Department, stated that in 2025, the bank's net interest margin was 1.60%, down 1 basis point (BP) year-on-year. The decline rate narrowed by 11 BP compared to the previous year, primarily due to balanced development in volume, price, and structure, leading to a continuous improvement in the extent of margin narrowing.

In 2026, the bank will continue to strengthen asset-liability portfolio management, optimize price guidance mechanisms, and take multiple measures to ensure reasonable and stable operation of net interest margins.

On the asset side: First, continuously optimize the allocation of major asset classes. Actively serving the real economy, accelerating credit asset deployment, and constantly optimizing asset structures to strengthen asset business resilience. Second, continuously improve differentiated pricing levels. Strengthening tiered and classified customer pricing guidance, deepening analysis of intrinsic customer value comparisons, and matching differentiated prices based on customer profiles. Simultaneously, continuously optimizing investment portfolio strategies, expanding high-yield asset allocations, and maintaining reasonable levels of financial market business returns.

On the liability side: First, continuously consolidate the basic foundation of deposit volume and price advantages. Leveraging physical layout advantages in the locality and combining channel construction with scenario creation to jointly drive steady growth in deposit scales. At the same time, expand demand deposits via "scenario circle mobilization" to promote simultaneous improvements in deposit volume and price. Second, continuously strengthen active liability management. Based on the bank's overall asset-liability portfolio, flexibly and dynamically arrange the rhythm of active liability absorption, focusing on the core goals of "adjusting structure and reducing costs" to optimize active liability products and maturity structures, further controlling and lowering overall liability costs.

Issuing Tier 2 Capital Instruments Timely, Following Up on Perpetual Bond Redemption and Issuance

Regarding whether the bank will supplement capital through private placements or convertible bonds in the future, Zhu Guochen, General Manager of the Asset and Liability Management Department and Director of the Board Office, stated that as of the end of 2025, the bank's Common Equity Tier 1 capital adequacy ratio was 12.67%, exceeding regulatory requirements by 5.17 percentage points. According to the "Capital Plan for 2026-2028," capital supplementation over the next three years will adhere to an endogenous-first, exogenous-secondary approach.

Regarding endogenous methods, the bank will implement the "Three New Momentum, Five Transformations, One Improvement" operational tasks, promoting steady efficiency gains and driving high-quality development through internal expansion. Regarding exogenous methods, the bank will issue Tier 2 capital instruments when appropriate, follow up on perpetual bond redemption and issuance work, monitor policies and market conditions for convertible bonds and special bonds for small and medium-sized banks, and assess issuance feasibility.

No Issues with Transparency of Dual Selection Mechanism or Last-Rank Elimination Rules

Addressing external concerns regarding the transparency of information disclosure on the personnel "dual selection" mechanism and last-rank elimination rules, Chairman Liu Xiaojun stated that the bank's "dual selection" revolves around the group's development strategy, focuses on core departmental functions, and aims to establish and improve a dynamic management mechanism allowing entry/exit and promotion/demotion at the head office. This optimizes the staffing structure of head office departments, builds a strong talent team, and fosters an atmosphere of entrepreneurship.

For this dual selection process, a mobilization meeting was held, and a formal notice was issued. The notice clearly outlined the entire dual selection plan, including the scope of selection. The work adheres to the principle of "better none than inferior," comprehensively analyzing and comparing candidates based on political quality, work performance, departmental evaluation, consistent performance, public reputation, and job-person fit. Specific aspects for verifying employee situations were explicitly listed, as were circumstances where selection would generally not occur. The process is clear and specific, with no lack of transparency in the dual selection mechanism or last-rank elimination rules.

During the competitive interview phase, the principles of "openness, fairness, and impartiality" were consistently upheld. The process strictly followed the application, qualification review, written exam, interview, investigation, and public announcement stages defined in the competition plan. External professional judges were invited to participate in the interview evaluation, with scores given on-site and results announced immediately. The entire process actively accepted supervision to ensure standardized procedures, transparent processes, and recognized results, effectively selecting outstanding talents with strong political qualities, outstanding professional capabilities, significant work achievements, and high public recognition.

In the recruitment and onboarding phase, job qualifications were objectively set based on business development needs and job responsibilities. Recruitment conditions, numbers, and processes were approved internally and by superior departments before being publicly released through official channels, ensuring all applicants received symmetric and fair information. During the evaluation execution phase, all applicants passing resume screening participated in unified testing. Evaluation focused on job competency, discarding personal background labels. The list of proposed hires was decided collectively and publicly announced according to regulations, actively accepting social supervision. In the onboarding processing phase, the bank strictly followed the "Labor Contract Law" and internal systems to sign labor contracts with employees legally, clarifying rights and obligations, ensuring full-process compliance in recruitment and onboarding.

Additionally, the bank established a scientific ability-job matching assessment mechanism to maximize human potential. First, a job competency model was constructed, decomposing jobs into capability dimensions to form quantifiable assessment standards covering professional skills, core qualities, leadership, etc., avoiding subjective judgment. Second, regular talent reviews were implemented to establish talent profiles, clearly identifying high-potential talents, mismatched personnel, and capability gaps. Third, a dynamic adjustment mechanism was established. For personnel with low job-match rates, priority was given to internal rotation, specialized training, or mentorship opportunities, and positions were adjusted through consultation with employee preferences to promote internal mobility.

Gradually Introducing Big Data Analytics Technology to Comprehensively Assess Customer Credit Risk

Regarding bond investments, Tang Jidong, General Manager of the Financial Markets Department, stated that according to CQRC BANK's annual report disclosure, the group's bond investment scale increased by 9.29% in 2025, with corporate bonds accounting for 9.83%. The proportion of credit bonds rated AA- and below accounted for less than 1% of the total bond portfolio, reflecting a prudent overall investment style.

In terms of credit bond investment, a comprehensive credit risk management system covering pre-investment, mid-investment, and post-investment stages has been established. An independent internal rating system has been built, leveraging internal credit rating systems and external big data information to effectively prevent credit risks.

In the pre-investment stage, high-rated entities in economically developed regions are selected. Their financial status and operations are comprehensively analyzed, due diligence is strictly implemented, and internal ratings and credit applications are completed. In the mid-investment stage, risk re-examination and compliance reviews are conducted for investment entities to ensure the validity and sufficiency of credit limits, which are then approved according to the bank's hierarchical approval authority, ensuring controllable investment risks and compliant processes. In the post-investment stage, daily monitoring of public opinion and abnormal fluctuations in bond valuations, regular inspection systems, on-site visits, and maintaining peer communication are used to timely identify risk signals from credit users, proactively conduct risk verification, and effectively prevent credit risks.

Subsequently, big data analytics technology will be gradually introduced. Beyond financial analysis and credit rating of bond issuers, the bank will comprehensively consider multi-dimensional data such as bond market trading conditions, subject social network public opinion, and market reputation to comprehensively assess customer credit risk. Leveraging technological construction capabilities, a collaborative, online, digital, and intelligent post-loan management system for credit customers across front, middle, and back-office departments will be formed. This will strengthen the application and analysis of market data, improving the timeliness and accuracy of credit risk monitoring and early warning.

Promoting Public-Private Linkage as a New Growth Pole for Multi-Point Profits

Regarding how to view the synergy between "Large Retail" and "Large Corporate," Vice President Zhang Jin stated that CQRC BANK is deeply constructing "Three New Momentum" drivers—digital-driven, industrial chain-driven, and scenario-circle-driven—to implement the group's "Five Transformations" and promote steady efficiency gains. He explained effective ways of public-private linkage from four dimensions: underlying architecture design, assessment incentives, comprehensive service solutions, and comprehensive service teams.

First, in the underlying architecture design for cross-departmental company-individual linkage, a normalized meeting mechanism and three-dimensional combat system are established through the integration of "business, technology, and data," connecting data and resources across corporate, retail, and technology lines to form a vertical collaboration link from the decision-making layer to the execution layer.

Second, regarding assessment incentives, a special performance scheme is implemented, embedding public-private linkage indicators into the evaluation systems of both corporate and personal relationship managers to guide both parties to jointly take responsibility for comprehensive customer value.

Third, in comprehensive service solutions, based on customer characteristics, integrated financial and non-financial service packages such as "corporate settlement + employee wealth management/exclusive benefits" are designed for SME owners, with digital tools used to achieve precise demand matching.

Fourth, in comprehensive service teams, single-soldier operations are broken, and "company relationship manager + personal relationship manager" composite service units are formed to collaboratively market and follow up services for the same business owner. Through the above four-dimensional linkage, the bank is effectively enhancing comprehensive customer value and promoting public-private linkage as a new growth pole for multi-point profits.

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