In-depth Analysis of Real Estate Non-Performing Loan Risks at Bank of Guizhou

Based on the collected information, I will prepare an in-depth analysis report on the real estate non-performing loan issues of Bank of Guizhou.

According to public data, the real estate non-performing loan ratio of Bank of Guizhou (Hong Kong Stock Code: 06199.HK) has experienced sharp fluctuations in recent years, showing typical characteristics of regional real estate risk exposure [1]:

From the data, it can be seen that Bank of Guizhou’s real estate non-performing loan ratio soared from a controllable level of 0.83% in 2021 to 40.39% in 2023 in just two years, a growth rate far exceeding industry expectations. Although it has dropped to 9.8% in H1 2025, it is still significantly higher than the industry average [2][3].

• Non-performing loan balance accounts for over 50%
  : In 2023, among Bank of Guizhou’s CNY 5.568 billion non-performing loans, CNY 3.046 billion came from the real estate industry, accounting for over 50% [1]
• Provision coverage ratio continues to face pressure
  : It dropped from 287.71% at the end of 2022 to around 250% at the end of 2024, testing the bank’s risk offset capability
• Overall deterioration of asset quality
  : The bank’s overall non-performing loan ratio rose from 1.15% in 2021 to 1.72% at the end of 2024, an increase of 0.57 percentage points over four years [4]

The surge in Bank of Guizhou’s real estate non-performing loan ratio is not an isolated incident, but a concentrated manifestation of in-depth regional economic problems:

As a typical province in southwest China, Guizhou Province has faced pressure from in-depth adjustments in the real estate market in recent years. Real estate investment and sales data have remained weak, directly affecting developers’ cash flow and debt-servicing capabilities. As a local corporate bank, Bank of Guizhou has relatively concentrated exposure to regional real estate customers, making it difficult to effectively diversify risks [1][5].

Major real estate developers in Guizhou, such as Zhongtian Urban Construction Group, Evergrande Group, and Sunshine City, have successively encountered operational difficulties or even bankruptcy reorganization in recent years. These enterprises are precisely important customer groups of Bank of Guizhou:

• Zhongtian Urban Construction Group
  : As the largest local real estate enterprise group in Guizhou, it once held shares in Bank of Guizhou and is currently in bankruptcy reorganization proceedings, causing significant losses to Bank of Guizhou’s loans [1]
• Evergrande Group
  : As a national large-scale real estate enterprise, its projects in Guizhou also face issues such as suspension of construction and delayed delivery
• Sunshine City
  : Also caught in a liquidity crisis, it has become one of Bank of Guizhou’s litigation targets

Bank of Guizhou’s loan business has significant industry and customer concentration issues:

This business structure, which is dominated by corporate business and weak in retail business, makes Bank of Guizhou highly sensitive to risk fluctuations in a single industry (real estate) [3][4].

In 2024, the former chairman of Bank of Guizhou was investigated for illegal lending exceeding CNY 300 million, an incident that exposed major flaws in the bank’s corporate governance and internal control [4]. Senior management corruption is often accompanied by ineffective credit approval processes and blindly aggressive risk appetite, ultimately leading to a large number of problematic loans.

From the perspective of data evolution, Bank of Guizhou has obvious lag in identifying real estate risks. When industry risks began to emerge, the bank still maintained a low real estate non-performing loan ratio (0.83%) in 2021, followed by an “explosive” growth in the next two years, indicating possible problems in its risk early warning mechanism and classification standards [1].

The situation of Bank of Guizhou is not an isolated case. According to industry research data, China’s regional city commercial banks are facing systemic pressure from real estate non-performing loans [5][6]:

Data Source: KPMG, Research on the Development of China’s Non-Performing Asset Industry (2025) [6]

According to data from the People’s Bank of China and the State Administration of Financial Regulation, the non-performing loan ratio of real estate loans in the banking industry has continued to rise from its low level in 2020, reaching a periodic high at the end of 2024. Due to characteristics such as customer sinking and regional concentration, the real estate non-performing loan ratio of city commercial banks is generally higher than that of state-owned large banks and joint-stock banks [5][6].

The government credit-related business (loans to local financing platforms) of city commercial banks in the central and western regions is closely related to real estate. The decline in local governments’ land fiscal revenue directly affects the debt-servicing capabilities of financing platforms, which in turn impacts the asset quality of banks [5][6].

The asset quality of regional city commercial banks shows typical characteristics of “regional economic binding”:

• Regions with strong economic vitality: Banks have good asset quality and great growth potential
• Regions under high economic transformation pressure: Banks face pressure on asset quality and restricted development

This structural differentiation is widening the gap between city commercial banks, and the Matthew effect is becoming increasingly obvious [6].

Facing the pressure of real estate non-performing loans, Bank of Guizhou has adopted a number of response measures:

By proactively reducing the scale of real estate loans, the bank has lowered its risk exposure to a single industry [1].

• Use multiple methods such as collection, write-off, and transfer to dispose of existing non-performing loans
• Intensify litigation recovery efforts; statistics show that 17 new real estate-related lawsuits have been added since 2023 [1]
• Cooperate with asset management companies to off-balance-sheet some risky assets

• Improve the risk monitoring system for real estate customers
• Incorporate high-risk customers into non-performing asset management in advance
• Establish a negative list system for the real estate industry

Bank of Guizhou has proposed a “Great Retail Transformation” strategy, aiming to gradually increase the proportion of personal loans from the current 14.46% to reduce the concentration risk of corporate business [3][4].

• Increase support for manufacturing, green credit, inclusive finance and other fields
• Reduce credit dependence on real estate-related industries
• Expand sources of intermediary business income

From the latest data, Bank of Guizhou’s asset quality has shown signs of marginal improvement:

However, it should be noted that:

1. Although the real estate non-performing loan ratio has decreased, it remains at a high level
2. Overall profitability is under pressure; the net profit growth rate in H1 2025 is only 0.31% [2][3]
3. Uncertainties in the regional economic environment still exist

Based on the case analysis of Bank of Guizhou and industry research, regional city commercial banks should build an asset quality management system from the following dimensions:

• Closely track the risk evolution of key fields such as real estate, local government financing platforms, and overcapacity industries
• Establish a differentiated risk early warning indicator system by industry and region
• Use big data and artificial intelligence technologies to enhance the forward-looking nature of risk identification

• Set concentration limits for single industries such as real estate and government financing platforms
• Regularly assess the credit risk status of the top 10 customers
• Appropriately diversify the customer structure to avoid over-reliance on a small number of large customers

• Proactively connect with the “white list” projects of the real estate financing coordination mechanism
• Support the “building delivery guarantee” work, and provide financial support under the premise of controllable risks
• Cooperate with local governments to do a good job in real estate risk resolution

• Reduce real estate exposure
  : Compress the scale of real estate development loans and control the concentration of real estate mortgage loans
• Increase lending to manufacturing
  : Support regional advantageous manufacturing and strategic emerging industries
• Develop inclusive finance
  : Increase credit support for small and micro enterprises and individual industrial and commercial households
• Expand retail business
  : Increase the proportion of personal loans and optimize the business structure

• Develop wealth management business
• Expand investment banking and asset management business
• Increase settlement and agency fee income

• Supplement core tier-1 capital through profit retention
• Introduce strategic investors or issue capital supplementary tools at the right time
• Optimize the structure of risk-weighted assets and improve capital utilization efficiency

• Maintain sufficient loan loss provision accrual
• Rational use of provision coverage ratio adjustment tools
• Pay attention to compliance requirements after the transition period of the Measures for Risk Classification of Financial Assets of Commercial Banks

• Strengthen the risk management function of the board of directors
• Increase the proportion and professionalism of independent directors
• Establish an effective incentive and restraint mechanism

• Improve the credit approval process and put an end to illegal lending
• Establish a mechanism for due diligence exemption and accountability for violations for credit personnel
• Strengthen related party transaction and concentration management

Since 2024, regulatory authorities have introduced a series of policy measures to support the real estate market:

• Extend the reasonable rollover policy for existing financing such as development loans and trust loans to December 31, 2026
• Support the operation of the real estate financing coordination mechanism
• Promote the acquisition of existing commercial housing to reduce inventory

These policies help ease the liquidity pressure of real estate enterprises and create conditions for the improvement of bank asset quality [5][6].

• The reform and risk resolution work of small and medium-sized banks continues to advance
• Local governments support the development of local banks through various methods
• The deposit insurance system provides protection for depositors and maintains financial stability

• Pressure
  : The in-depth adjustment of the real estate industry will continue, and risks of some real estate enterprises may continue to be exposed; pressure on regional economic transformation still exists
• Opportunities
  : Policy support is increasing, high-quality real estate enterprises will receive more financial support; the economy is expected to gradually stabilize and recover

• City commercial banks in economically developed regions will maintain a good development trend
• City commercial banks in the central, western and northeastern regions face greater transformation pressure
• Mergers and acquisitions among banks may accelerate

1. The surge in Bank of Guizhou’s real estate non-performing loan ratio is the result of the superposition of regional economy and industry cycle
   : It soared from 0.83% in 2021 to 40.39% in 2023, reflecting the concentration risk exposure issue of individual regional banks in the real estate sector.
2. Asset quality differentiation among regional city commercial banks intensifies
   : City commercial banks in the Yangtze River Delta region have excellent asset quality, while those in the central, western and northeastern regions generally face greater pressure, showing the characteristics of “overall controllable, partial pressure” [6].
3. Bank of Guizhou has achieved initial results in risk resolution
   : Through measures such as reducing real estate exposure, stepping up non-performing asset disposal, and promoting retail transformation, the bank’s real estate non-performing loan ratio has dropped sharply from its peak, but the overall asset quality still requires continuous attention.
4. Regional city commercial banks need to build a systemic risk management system
   : Covering multiple dimensions such as risk identification, early warning, resolution, business transformation, capital management and corporate governance.

• For regional banks with excellent asset quality and sufficient provisions (such as Bank of Ningbo, Bank of Hangzhou, etc.), investors can pay attention to their investment value on dips
• For banks under asset quality pressure and with insufficient provisions, investors should maintain a cautious attitude

• Closely track the implementation effect of real estate support policies
• Pay attention to the economic development and industrial structure changes in the region where the target bank is located

• Focus on leading indicators such as non-performing loan ratio, provision coverage ratio, and proportion of special-mention loans
• Pay attention to changes in banks’ real estate loan exposure and progress in non-performing asset disposal

[1] Securities Times - Bank of Guizhou’s Corporate Real Estate Non-Performing Loan Ratio Reaches 40%, Regional Real Estate Pain to Be Resolved (https://www.stcn.com/article/detail/1172027.html)

[2] Time Weekly - Bank of Guizhou’s 2025 Mid-year Report Released: Net Profit of CNY 2.129 Billion, Steady Improvement in Asset Quality (https://time-weekly.com/post/324258)

[3] Sina Finance - Bank of Guizhou: Senior Management Corruption, Governance Disorder, Real Estate Non-Performing Loan Ratio Exceeds 40% (https://finance.sina.com.cn/roll/2025-07-08/doc-infetqht5968068.shtml)

[4] Tencent News - Bank of Guizhou’s Senior Management Restructuring: New Pattern of “One Chairman and Five Vice Chairmen”, Former Chairman’s Fall and Penalties (https://news.qq.com/rain/a/20260101A05B1T00)

[5] Lianhe Ratings - 2025 City Commercial Bank Industry Analysis (https://www.lhratings.com/file/fda56e6233c.pdf)

[6] KPMG - Research on the Development of China’s Non-Performing Asset Industry (2025) (https://assets.kpmg.com/content/dam/kpmg/cn/pdf/zh/2025/10/2025-research-on-the-development-of-china-s-non-performing-asset-industry.pdf)

[7] Fitch Bohua - 2025 China Commercial Bank Credit Outlook — Regional Banks (https://www.fitchbohua.cn/sites/default/files/2024-12/2025年中国商业银行信用展望_区域性银行.pdf)

Report Generation Date: January 7, 2026
This report is for reference only and does not constitute investment advice. Investors should make prudent decisions based on their own risk tolerance.