Risk Clearing in Order, Is Xiamen Bank Meeting a Repair Inflection Point?

Listing | Zhongfang.com

Review | Li Xiaoyan

Recently, Xiamen Bank issued a public notice regarding a forced execution related to a loan dispute exceeding 400 million yuan, which once again drew market attention to the operating condition of this listed city commercial bank based in Fujian. Against the backdrop of narrowing interest margins and increasing pressure on asset quality management industry-wide, the bank’s phased performance fluctuations and isolated risk events are seen by outsiders as a “stress test” on its development path.

Objectively, the challenges currently faced by Xiamen Bank include both common pressures from macroeconomic conditions and industry cycles, as well as short-term pains from internal business restructuring. However, through financial reports and operational actions, it’s clear that the bank has not stagnated under pressure. Instead, it is taking a more cautious approach to strengthen risk control, optimize asset-liability structure, and deepen regional real economy engagement. Short-term bottoming out of performance does not mean a decline in growth momentum; rather, it creates conditions for subsequent lighter operations and steady recovery. As the saying goes, “Talented youths from Jiangdong are many; a comeback is unpredictable,” Xiamen Bank is leveraging its regional advantages, adhering to compliance, and continuously refining its operations, walking a high-quality development path focused on solidifying foundations, restoring quality, and building momentum for rebound.

The disclosure of this litigation reflects Xiamen Bank’s transparency and proactive risk management. The announcement states that due to the relevant enterprise’s failure to fulfill payment obligations on time, the bank has applied for court enforcement. The involved amount includes principal of 418.6765 million yuan plus interest, penalty interest, and other charges. In response to this risk, the bank has promptly and fully provisioned for impairment and clearly stated that this lawsuit will not have a significant impact on current or future profits.

This approach demonstrates Xiamen Bank’s mature risk prediction and provisioning buffer capacity. Even when facing large single-credit risks, the bank can minimize operational impact through prudent pre-provisioning and legal recovery afterward, showcasing the professionalism of a listed bank in compliance and risk mitigation. Bringing risks to the table and advancing disposal in accordance with laws and regulations reflects sound management and governance, not signs of risk loss control.

Looking at the first half of 2025, Xiamen Bank has indeed delivered a somewhat challenging performance report since its listing. Operating income reached 2.689 billion yuan, down 7.02% year-on-year; net profit attributable to the parent company was 1.158 billion yuan, down 4.59%. Meanwhile, the non-performing loan (NPL) ratio increased by 0.09 percentage points to 0.83%, and the provision coverage ratio fell to 321.67%, indicating phased adjustments in several key indicators.

However, when interpreting these figures within the broader industry context, a more rational understanding of their fluctuations emerges. In the first half of 2025, the entire banking sector faced sustained pressure from declining net interest margins, with the national commercial banks’ net interest margin dropping to a historic low of 1.42%. Under this generally challenging environment, Xiamen Bank’s net interest margin slightly decreased from 1.14% to 1.08%, and its net interest spread from 1.06% to 1.04%, with overall moderate declines. Notably, its net interest margin rebounded by 4 basis points from Q1 to Q2, indicating that its asset-liability management strategies are beginning to take effect and that the margin bottom has stabilized.

Further analysis of revenue structure reveals that the core of profit pressure is not due to a sharp slowdown in lending but rather market disturbances affecting non-interest income. In the first half, non-interest net income dropped by 21.72% year-on-year, with gains and losses from fair value changes turning negative, becoming the main drag on revenue. This reflects the sensitivity of financial market activities to external interest rate environments and also indicates that the bank’s traditional lending business remains stable, with its profit base intact.

In terms of profit performance, total profit declined more than net profit, mainly due to reasonable adjustments in income tax expenses. While this is a financial optimization, it also provides a buffer for the bank to maintain profitability and capital strength during industry downturns, creating conditions for continued investment in the real economy and business structure optimization.

Regarding asset quality, the market’s concern over the decline in the provision coverage ratio is understandable. From a high of nearly 400% to 321.67%, this does reduce future risk absorption capacity to some extent. Objectively, however, this level remains well above the regulatory red line of 120% and significantly better than industry averages, maintaining a solid risk buffer. Additionally, the “double decline” in special mention loans and their proportion indicates a mitigation of potential asset risks, with a marginal improvement trend in asset quality. Although non-performing loans have increased, they are mainly concentrated in cyclical industries such as manufacturing and wholesale retail, consistent with the current economic recovery phase, and there is no sign of regional or systemic risk spreading.

Facing these challenges, Xiamen Bank’s response is clear and solid, with effective cost control on liabilities. Data shows that in the first half, the bank’s average interest paid on deposits decreased year-on-year: corporate deposit interest rates dropped by 38 basis points, and individual deposit interest rates fell by 16 basis points. This significant cost reduction on liabilities provides a strong foundation for stabilizing net interest margins and improving profitability, demonstrating the bank’s refined management of customer base, deposit structure, and funding pricing.

As a city commercial bank rooted in Xiamen and serving the Haixi economic zone, regional advantage remains the core and most enduring competitive edge. Fujian and Xiamen’s active private economy, developed foreign trade, and dense Taiwanese-invested enterprises offer broad business opportunities. The half-year report shows that the bank’s corporate loans grew by 17.21%, green loans by 29.58%, and technology loans by 18.59%, with credit resources precisely allocated to policy-supported, promising real economy sectors—aligning with regulatory guidance and ensuring stable income and deposit accumulation.

Looking ahead, Xiamen Bank’s rebound does not require dramatic short-term performance swings but should follow a steady, structural recovery path. On the liability side, the bank will continue to deepen local operations, leveraging transaction banking, cash management, payroll services, and other core businesses to expand low-cost settlement deposits, strengthening its low-cost funding advantage. On the asset side, it will avoid reckless scale expansion, instead enhancing risk-based pricing and channeling more resources into high-quality manufacturing, green finance, tech finance, and Taiwanese enterprise finance, improving asset yield and risk matching. Additionally, moderate adjustments to financial market strategies will enhance investment portfolio stability, smooth non-interest income fluctuations, and promote a more balanced profit structure.

Bank development is never a 100-meter sprint but a long-distance race testing endurance, resolve, and professionalism. After a phase of adjustment, Xiamen Bank is at a critical stage of “solidifying the foundation, optimizing structure, and honing internal skills.” Proper handling of individual risk events and rational short-term performance fluctuations are normal parts of development, representing risk release and cleanup.

In the future, with regional economic recovery, interest margin stabilization, and continuous asset-liability optimization, Xiamen Bank is expected to turn its current “performance trough” into a “reservoir” for future growth, leveraging its solid customer base, regional特色, and improved management.

After the storm comes clear skies; after adjustment, there is a leap forward. By staying true to its mission of serving the local economy, real economy, and citizens, maintaining stability, and enhancing competitiveness, Xiamen Bank is fully capable of achieving steady performance recovery, carving out a unique path of value appreciation in regional finance, and delivering a more stable and high-quality development to the market and investors.