Revenue growth is slowing, interest margin has significantly narrowed, and the "small and scattered" Zhangjiagang Bank faces growth challenges.

March 30, A-share listed rural commercial banks Zhangjiagang Bank disclosed its 2025 annual report.

In 2025, Zhangjiagang Bank recorded operating revenue of RMB 4.747 billion, up 0.75% year over year; it posted attributable net profit to the parent company of RMB 1.979 billion, up 5.35% year over year. Meanwhile, Zhangjiagang Bank’s net interest margin has already narrowed to 1.39%, and its net interest income has also been declining for three consecutive years.

From the time the leadership team换届 (term change) was officially introduced in 2017 and the strategic positioning of “making it smaller and more dispersed” was put forward, to today, the share of Zhangjiagang Bank’s agricultural-related and inclusive small and micro business loans has exceeded 91%.

However, this differentiated positioning does not seem to have given Zhangjiagang Bank broader development room. As the last two years have seen increased efforts by state-owned large banks to move down to their customer base, Zhangjiagang Bank, whose loan origination has always focused on small and micro customers, is also facing growth challenges such as stalling revenue growth, sharp declines in loan interest rates, and ongoing narrowing of the net interest margin.

01

Net interest income plunges, core engine loses momentum

In recent years, Zhangjiagang Bank’s revenue growth has not been stable.

From 2021 to 2025, Zhangjiagang Bank’s operating revenue were RMB 4.616 billion, RMB 4.827 billion, RMB 4.541 billion, RMB 4.711 billion, and RMB 4.747 billion, respectively, with year-over-year growth of 10.05%, 4.57%, -5.93%, 3.75%, and 0.75%, respectively.

Overall, Zhangjiagang Bank’s revenue growth rate has slowed year by year, and 2023 saw a rare negative growth. After the negative-growth trend reversed, in 2025 it only achieved revenue growth of 0.75% again. Behind the stagnation in revenue growth is the drop in net interest income, which serves as a pillar of revenue.

In 2025, Zhangjiagang Bank’s net interest income was RMB 3.036 billion, down RMB 343 million year over year, with a decline of 10.16%.

In fact, since reaching a peak of RMB 3.917 billion in 2022, Zhangjiagang Bank’s net interest income has continued to slow year by year. In 2023 to 2025, its net interest income was RMB 3.864 billion, RMB 3.379 billion, and RMB 3.036 billion, respectively, with year-over-year declines of 1.35%, 12.55%, and 10.16% in sequence.

The sustained decline in net interest income is driven by the compression of spread space. While net interest margin compression is an industry-wide commonality, among listed banks, Zhangjiagang Bank’s decline is particularly significant.

The annual report shows that in 2025, Zhangjiagang Bank’s net interest margin was 1.39%, down 23 basis points year over year; its net profit spread also narrowed from 1.4% to 1.2%. Looking at a longer time horizon, in 2022 the bank’s net interest margin was 2.25%, and its net profit spread was 1.99%—in just three short years, it fell to nearly 1%, and Zhangjiagang Bank’s profitability has come under clear pressure.

02

Loan pricing ability weakens; inclusive strategy falls short

Further breakdown shows that the most “eye-catching” decline on the interest-earning asset side is the average loan yield.

In 2022, the bank’s average loan yield was 5.63%; it fell to 5.18% in 2023, further to 4.38% in 2024, and in 2025 Zhangjiagang Bank’s average loan yield was only 3.6%. The year-over-year decline was as high as 78 basis points; compared with 2022, over just three years it dropped by 2.3 percentage points.

Behind the rapid plunge in average loan yield is Zhangjiagang Bank’s continued weakening pricing capability in the field of inclusive small and micro loans.

Zhangjiagang Bank is one of the first batches of rural commercial banks formed through restructuring of rural credit cooperatives nationwide, with the restructuring established on November 2001. In the early stage of its establishment, the bank emulated large banks’ “heavy focus on corporate, light on retail” business model; loans with a single borrower credit line of more than RMB 50 million once accounted for more than 40% of total loans.

As credit concentration risk and capital pressure increasingly became prominent, and as multiple large credit risk exposures were revealed, Zhangjiagang Bank began adjusting its business strategy. Ultimately, after the leadership team換届 in 2017, it officially established the strategic positioning of “making it smaller and more dispersed.”

So-called “making it smaller” means smaller credit limits per borrower, focusing on small and micro enterprises and individual business loans; “making it more dispersed” means a more dispersed customer base, avoiding excessive concentration of large loans.

In recent years, Zhangjiagang Bank has regarded “making it smaller and more dispersed” as the fundamental route for its transformation and has carried out differentiated competition based on it. In recent years, the proportion of “agricultural-related and small and micro enterprise loans” at the bank has continued to rise. As of the end of 2025, the outstanding balance of agricultural-related and small and micro enterprise loans reached RMB 127.6 billion, and their share in all loans rose to 91.02% (based on the parent company).

In other words, the vast majority of loans that Zhangjiagang Bank lends out are agricultural-related and small and micro enterprise loans—this includes business loans within personal loans, as well as small and micro enterprise loans within corporate loans.

But just because most of its own loan funds go into inclusive small and micro loans does not mean it possesses absolute competitiveness in the regional small and micro market. In fact, over the past two years, as large banks have continued to move down their business, leveraging advantages such as stronger risk control capabilities and lower funding costs, they have gradually penetrated areas such as county-level economies and small and micro enterprises. Small and medium-sized banks that focus on small and micro businesses have all been hit to varying degrees.

Zhangjiagang Bank is no exception. As of the end of 2025, the bank’s outstanding balance of personal loans was RMB 43.257 billion, of which outstanding personal business loans were RMB 26.095 billion, down 1.39% from the beginning of the year. Outstanding corporate loans (excluding discounting) were RMB 82.529 billion, up 13.07% year over year—an impressive increase. However, the loan balances of the top ten loan customers were RMB 4.435 billion, up 4.95% from the end of 2024, and concentration further rose to 20.71%.

Faced with insufficient demand for effective credit and the shock of large banks moving down, Zhangjiagang Bank can only keep lowering its loan interest rates to win over small and micro customers and maintain the expansion of risk assets. Perhaps this also explains why Zhangjiagang Bank’s average loan yield has sharply fallen in recent years.

When average loan yield shrinks significantly, Zhangjiagang Bank’s interest income from loans also decreased by 11.3% year over year in 2025, reaching RMB 5.136 billion. Interest income from personal loans decreased by 26.89% year over year to RMB 1.904 billion. Thanks to faster scale expansion, corporate loans recorded positive growth, but their growth rate was only 3.01%.

Although Zhangjiagang Bank directs more than 91% of its credit assets to the inclusive small and micro sector, in an environment where competition in the inclusive small and micro market is becoming increasingly intense, related loan interest rates are repeatedly pushed lower, and the marginal benefit of scale expansion keeps diminishing. Once banks lose pricing power, the so-called differentiated advantage disappears. Zhangjiagang Bank’s true quality and sustainability of inclusive finance may not align with the descriptions in its financial report.

03

Fee income grows “inflated,” wealth management struggles to support growth

In response to the continuous downward trend in net interest income, Zhangjiagang Bank has also been vigorously developing wealth management business to create new business growth points and offset the pressure from narrowing spreads.

In November 2025, Zhangjiagang Bank completed the registration information change of its Business License; its business scope was expanded to include the sale of publicly offered securities investment funds. Fund sales are one of the important businesses in wealth management. With this license granted, Zhangjiagang Bank has gained the qualification for fund sales, and its wealth management can further deepen.

However, judging from actual data, perhaps because Zhangjiagang Bank started pushing wealth management later, its wealth management scale is currently relatively small, and neither its revenue nor its scale growth is stable.

As of the end of 2025, Zhangjiagang Bank’s wealth management business scale was RMB 26.481 billion, up 17.93% from the beginning of the year.

The bank’s wealth management business mainly includes distribution business and wealth management products. Notably, in its 2025 third-quarter report, Zhangjiagang Bank separately disclosed the scale of its wealth management business: wealth management product balance was RMB 24.434 billion, up 14.85% from the beginning of the year; the distribution business scale was RMB 4.343 billion, up 162.73% from the beginning of the year.

But in its 2025 annual report, Zhangjiagang Bank did not separately disclose the scale of these two businesses; it only disclosed the overall wealth management business scale. Moreover, this figure is smaller than the sum of the wealth management products and distribution business scales disclosed in the third-quarter report, which means that, if there is no difference in statistical scope, the bank’s wealth management business scale in the fourth quarter may have contracted quarter over quarter.

On the revenue side, in 2025 Zhangjiagang Bank’s fee income from its wealth management business was RMB 107 million, down 18.24% year over year; fee income from agency business was RMB 39.6611 million, up 74.09% year over year. Agency business saw a higher fee income growth rate, but because the overall scale is small, the combined fee income for wealth management-related businesses was RMB 147 million, instead down 4.55% year over year.

As fee income from the middle layer shrank, and fee and settlement/clearing fees, as well as electronic banking fees, also declined across the board, fee income and commission income decreased by 4.66% year over year to RMB 215 million.

However, because fee and commission expenses fell sharply by 40.97% to RMB 115 million, Zhangjiagang Bank ultimately recorded net fee income of RMB 99 million, up 235.27% year over year. But growth driven by compressing expenses is ultimately “inflated.” The quality of Zhangjiagang Bank’s growth in fee income is not high.

A massive amount of information and precise analysis—available in the Sina Finance app