The new management team’s debut! A direct look at Zhejiang Commercial Bank’s earnings conference, with no excessive focus on short-term performance or "quick profit" strategies.

Recently, the Zhejiang Business Bank held its 2025 annual results briefing in Hangzhou.

This is the bank’s new management team’s “debut” in the capital markets. Chairman Chen Haiqiang, President Lü Linhua (proposed) and a group of senior executives faced the market’s concerns head-on and addressed eight questions from attendees.

In the previous year, the bank posted operating income of RMB 62.51 billion and net profit attributable to the parent of RMB 12.93 billion, both with year-on-year declines; total assets at year-end were RMB 3.48 trillion. The non-performing loan ratio has continued to fall for four consecutive years, reaching 1.36%. “We have met the targets set in the board’s budget,” Chen Haiqiang said.

He noted that, in an environment where net interest margins continued to narrow, industry competition intensified, and risk control faced mounting pressure, Zhejiang Business Bank did not pursue growth for the sake of scale, did not overemphasize making quick money from short-term performance, and did not take the old path of “building up big clients.” Instead, it has adhered to long-termism—solidifying the foundation, adjusting the structure, strengthening compliance, and controlling risks.

At the same time, Chen Haiqiang conveyed confidence and determination that the new leadership team will guide the whole bank through cycles by means of “three certainties,” including the certainty that asset quality will continue to improve at the margin, the certainty of growth drivers, and the certainty of improving capital returns.

Responding to the decline in operating performance

In 2025, Zhejiang Business Bank’s operating income and net profit attributable to the parent decreased by 7.6% and 14.8% year on year, respectively. Lü Linhua said this was mainly due to two factors:

First, the economy is still in a weak recovery state. Effective demand for credit is gradually recovering, and the trend of narrowing bank net interest margins continues. “Last year, our net interest margin fell by 11 basis points; overall, the trend remained consistent with the industry.”

Second, compared with the one-way market in 2024, in 2025 China’s bond market saw wide-range volatility and increased fluctuations, which had a major impact on the returns of the bank’s trading financial assets. “Last year, the decline in our non-interest income was close to 20%.”

He also mentioned that Zhejiang Business Bank, in the new cycle, adopted an asset allocation strategy of “low risk, equal returns,” which in the short term also created phased pressure on net interest margin and even on the bank’s overall operating revenue.

“During a non-boom cycle, high yields often struggle to cover high risks. Therefore, we proactively adjusted, optimized, and carried out customer integrated operations with comprehensive returns as the yardstick, in order to achieve our ‘low risk, equal returns’ goal,” Lü Linhua said.

He emphasized that, from a long-cycle perspective, this strategy will be beneficial for the bank’s steady and sound development. The annual report shows that last year the number of the bank’s corporate customers grew by 11.8%, the foundation of its retail customer base was strengthened, and the non-performing loan ratio has continued to fall for four consecutive years.

Looking ahead to the next stage, Lü Linhua believes that some of the higher-yield assets previously deployed by the bank are gradually exiting. Combined with the “low risk, equal returns” strategy, the yield on newly deployed assets will decline somewhat, and net interest margins will continue to face pressure in the short term.

“We will make efforts on both sides of assets and liabilities, strive to stabilize net interest margins and increase non-interest income, and ensure that operating revenue is steady and sustainable. At the same time, we will continue to advance management of comprehensive risk and comprehensive costs, squeeze out unnecessary fat from costs, and ensure that profits are satisfactory,” he said.

Deepening efforts in Zhejiang

“Zhejiang is the keystone and strategic support for Zhejiang Business Bank. One-third of our institutions, people, and business are in Zhejiang. Serving Zhejiang, serving Zhejiang Business Bank, and serving the people of Zhejiang is the foundation for the bank’s development,” said Luo Feng, deputy president of the bank.

2025 is also the first year of Zhejiang Business Bank’s new three-year campaign to deepen its efforts in Zhejiang. The annual report discloses that last year the total volume of financing services provided by the bank to the whole province was nearly RMB 1.2 trillion, with two-thirds of新增信贷 (new loans) directed to within the province.

In addition, the bank’s deposits within the province exceeded RMB 63 billion, ranking first among joint-stock banks. Its supply chain finance has covered 14 thousand-billion-level featured industrial clusters in the province. Cumulative underwriting of non-financial bond debt and local government bonds also ranked among the top peers.

Luo Feng said that next steps will focus on building a differentiated service model that can be replicated and promoted in terms of “serving Zhejiang, serving Zhejiang Business Bank, and serving the people of Zhejiang”:

First, actively integrate into Zhejiang’s overall development. Focusing on areas such as building a high-quality development model for common prosperity demonstration zones, it will continue to deepen government-bank cooperation, carry out three-level coordinated linkage and systematic docking of services, and form demonstration and leading effects in serving major strategies across the province.

Second, focus on Zhejiang Business Bank services. Strengthen coordination and linkage among branches inside and outside the province and among domestic and overseas branches. Relying on the advantages of featured businesses such as supply chain finance, cross-border finance, and sci-tech innovation finance around the ten key service scenarios, it will build a service ecosystem aligned with Zhejiang Business Bank’s needs.

Third, do a good job of wealth management for residents. Focusing on resident customers in Zhejiang—especially the middle-class group demands such as owners of small and medium-sized enterprises, doctors, teachers, and high-level talent—it will build a customer service system and data system covering the whole customer lifecycle within the province to improve residents’ income from property.

“It is important to build the main base well, go deep and truly tap the provincial market. At the same time, steadily roll out good practices to the whole country, strengthen coordination among institutions inside and outside the province and two-way empowerment, and form a development pattern where deepening efforts in Zhejiang and serving the whole country advance together,” Chen Haiqiang said.

Advancing the ‘Three Major Projects’

Chen Haiqiang believes that as we step into the bank 4.0 era, technology investment is no longer just a simple cost item—it also needs to become a source of returns that reduce costs and improve efficiency.

“The ultimate goal of advancing technology transformation is not to own the most advanced systems, but to deliver the most powerful enabling capabilities—to reshape the customer experience, improve operational efficiency, build a solid risk control line, and empower front-line employees with technology,” he said.

According to Lü Linhua, in the field of technology, Zhejiang Business Bank is advancing the “Three Major Projects”:

First is “revitalizing and strengthening the foundation.” The new core banking system that the bank has spent more than two years building will go live by the end of the year. Compared with the old system, the new core system’s concurrent trading capability will improve by more than five times. “In the future, the assembly work for launching new products will be as convenient as building blocks.”

Second is data governance. The bank has launched enterprise-level standardization and label-setting work. The first batch of collected data dictionaries exceeds 20,000 items. The digital middle platform has been built with eight major data marts for corporate banking, retail, interbank, and so on, providing individualized data support for more than 200 application systems across the bank.

Third is AI enablement. The bank has already built a knowledge engineering platform and an intelligent agent platform, which can support unified calls for knowledge and development of personalized intelligent agents.

“In the next stage, we hope to actively embrace digital reform and artificial intelligence, and maintain a leading position to a certain extent among peers,” Lü Linhua said. This year, Zhejiang Business Bank will focus on three areas:

First, with security as the prerequisite, it will build a technology architecture model featuring multi-centers and multi-active sites across two locations. It will continue to increase investment in and construction of the basic network, ensuring that data security and network security are integrated throughout the entire management process.

Second, it will focus on building vertical models with greater intensity in two areas: retail and risk. “We hope the whole bank can enter the stage of intelligent decision-making and human-machine collaboration as soon as possible.”

Third, it will deepen cooperation with leading internet companies. It will focus on improving end-to-end capabilities in scenario building and integrated customer services, and jointly build technology frontier projects with universities and research institutes.

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