Bond market volatility drags down non-interest income! Yunnan Rural Commercial Bank's non-interest net income in 2025 is expected to decline by nearly 24%

This report (chinatimes.net.cn) reporter Li Minghui reports from Beijing

The first annual report of A-share rural commercial banks is out.

On March 26, the listed bank Chongqing Rural Commercial Bank (hereinafter referred to as “Chongqing Rural Bank”) released its annual report for 2025. The report shows that by the end of 2025, Chongqing Rural Bank’s total assets exceeded 1.66 trillion yuan, a year-on-year increase of 9.95%, marking the highest growth rate in nearly four years; the bank achieved an operating income of 28.65 billion yuan and a net profit of 12.42 billion yuan, representing year-on-year increases of 1.37% and 5.35%, respectively.

In terms of business structure, in 2025, Chongqing Rural Bank’s net interest income growth turned positive from negative, increasing by 7.85%, contributing nearly 85% to the bank’s revenue; however, the non-interest net income, which had been the engine driving revenue growth in previous years, saw its growth turn negative, decreasing by 23.92% year-on-year.

“For Chongqing Rural Bank, while 2025 saw an increase in net interest income achieved through cost control on the liability side, the decline in non-interest net income also reflects the pressure faced by trading operations, including proprietary bond trading,” said Yuan Shuai, deputy director of the Investment Department at the China Urban Development Research Institute, in an interview with a reporter from the Huaxia Times. Currently, the continued fluctuations in the bond market pose significant challenges to the profitability stability of banks’ proprietary trading operations, and how to balance profitability and stability in a volatile market has become a topic for banks’ proprietary businesses to continuously explore.

Non-interest net income decreased nearly 24% year-on-year

As the “top dog” among A-share rural commercial banks, Chongqing Rural Bank achieved double growth in revenue and net profit, delivering a solid report card for 2025.

From the revenue structure, nearly 85% of Chongqing Rural Bank’s revenue comes from the interest margin. In 2025, the bank achieved net interest income of 24.261 billion yuan, an increase of 7.85% year-on-year. This marks the first time in five years that this metric’s growth rate has turned positive, which is attributed to the steady expansion of the bank’s loan scale and the simultaneous optimization of funding costs.

Chongqing Rural Bank also admitted in its annual report that in 2025, its net interest margin was 1.51%, unchanged year-on-year; the net interest yield was 1.60%, down 1 basis point year-on-year, remaining basically stable. “From the asset side, the group has solidified financial services around the ‘five major financial articles,’ continuously increasing support for the real economy, with a steady growth in credit scale. Under the comprehensive impacts of benefiting the real economy, repricing of stock loans, and declining market interest rates, asset yield has decreased. From the liability side, the group has continuously strengthened deposit volume and price management, optimized deposit structure, reinforced proactive liability management, further promoting a steady decline in financing costs and buffering the impact of declining asset yield, leading to a relatively balanced adjustment of rates on both the asset and liability sides.”

Reporters from the Huaxia Times noticed that from 2021 to 2024, Chongqing Rural Bank’s net interest income had been on a downward trend, while non-interest net income played a crucial role in supporting the bank’s overall revenue during this period. However, in 2025, this indicator faced pressure, declining 23.92% year-on-year to 4.388 billion yuan, contributing about 15% of revenue. In response, Chongqing Rural Bank acknowledged in its financial report that this was “mainly affected by market conditions.”

Financial reports show that Chongqing Rural Bank’s non-interest income primarily comes from other non-interest net income, including investment (bonds, funds, interbank certificates of deposit, wealth management, trusts, etc.) earnings. In 2025, Chongqing Rural Bank’s other non-interest net income was 3.093 billion yuan, a decrease of 1.062 billion yuan year-on-year, a drop of 25.55%, significantly dragging down the bank’s non-interest net income.

Chongqing Rural Bank admitted that investment income and net gains/losses from fair value changes decreased a total of 855 million yuan, mainly due to fluctuations in market interest rates, resulting in lower yields on trading financial assets like fund investments, and the investment income and fair value changes were not as good as the same period last year. The bank stated that the group continues to strengthen market analysis, deepen the use of multiple strategies, and comprehensively enhance the effectiveness of the investment portfolio.

“The bond market in 2025 can be described as a year of navigating through turbulence, characterized by increased volatility and repeated fluctuations,” Yuan Shuai said, noting that the ongoing fluctuations in the bond market pose significant challenges to the profitability stability of banks’ proprietary trading activities. For banks like Chongqing Rural Bank, bond investments in proprietary operations are one of the significant sources of profit, but the substantial volatility in the bond market makes this income unpredictable. When interest rates drop rapidly, rising bond prices can yield considerable price difference profits, but once interest rates turn upward, not only might previous floating profits quickly shrink, but there could also be floating losses, and this significant fluctuation in profitability directly affects the overall profit performance of the bank’s proprietary business, thereby constraining the bank’s net profit growth.

Weak growth in intermediary business

Reporters noted that Chongqing Rural Bank is not only the first rural commercial bank in the country to be listed as “A+H” shares but also the first rural commercial bank in China to reach a trillion yuan in asset scale. In recent years, the bank has maintained its leading position among listed rural commercial banks, thanks to its solid asset scale advantage.

What sets Chongqing Rural Bank apart is that it has a wholly-owned subsidiary, YNRC Wealth Management, making it the only rural commercial bank in the country currently holding a wealth management subsidiary license. In 2025, Chongqing Rural Bank also became the third rural commercial bank to successfully obtain the qualification for securities investment fund custody, following Guangzhou Rural Bank and Shanghai Rural Bank.

However, despite this licensing advantage, Chongqing Rural Bank’s intermediary income business performance did not meet expectations. In 2025, net income from fees and commissions was 1.294 billion yuan, a year-on-year decline of 19.71%, accounting for only 4.52% of operating income, far below the level of high-quality peers in the industry.

Specifically, in 2025, the bank achieved bank card fee income of 190 million yuan, a year-on-year decrease of 104 million yuan. Commission from agency and entrusted business was 630 million yuan, a decrease of 107 million yuan year-on-year, which Chongqing Rural Bank explained was mainly due to increased fluctuations in market interest rates and a decline in demand for distribution business, leading to a year-on-year decline in related fee income.

Additionally, in 2025, the bank’s other fees and commission income was 164 million yuan, down 112 million yuan year-on-year. In this regard, Chongqing Rural Bank stated that the increased fluctuations in the bond market had led to a decline in the scale of bond trading circulation, resulting in a year-on-year decrease in related fee income.

Reporters noted that in 2025, Chongqing Rural Bank launched new products such as foreign currency, fixed-income enhancement, and insurance trust.

Chongqing Rural Bank stated in its financial report that in 2025, the sales of key products continued to grow. The bank launched 430 new wealth management products, 87 fund products, 89 precious metal products, and 64 insurance products, and introduced foreign currency, fixed-income enhancement, and multi-asset strategy products for the first time, launching wealth management service trust business and achieving the bank’s first insurance trust deal.

In the future, how will Chongqing Rural Bank leverage its licensing advantages to activate the potential of intermediary business and promote a steady recovery in net income from fees and commissions? In this regard, a reporter from the Huaxia Times sent a letter to the bank’s disclosure email on March 26, but had not received a response by the time of publication.

Editor: Feng Yingzi Chief Editor: Zhang Zhiwei

Massive information, precise interpretation, all in the Sina Finance APP