Analysis of Chengde Bank's 7 Consecutive Years of Fee Income Losses and Non-Performing Loan Risks

Based on the collected data, I will systematically analyze the core issues of Chengde Bank’s fee income remaining negative for 7 consecutive years and the reduction of non-performing loans against the backdrop of regional economic restructuring.

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According to Chengde Bank’s 2024 annual report and historical financial data, the bank’s net fee and commission income has remained negative for 7 consecutive years [1][2]:

Year	Net Fee and Commission Income (10,000 yuan)	YoY Change
2018	-3,568	-
2019	-24,100	Substantial Deterioration
2020	-47,100	Significant Deterioration
2021	-65,800	Continuous Deterioration
2022	-70,100	Peak Reached
2023	-59,900	Narrowed Slightly
2024	-32,100	Notable Improvement

, a figure that represents an extreme case among city commercial banks. Although the loss narrowed to -321 million yuan in 2024, it still severely drags down the overall income structure [1][2].

From an industry perspective, the net fee and commission income of listed banks fell by 9.4% year-on-year in 2024, marking three consecutive years of decline. This was mainly impacted by the following factors [3]:

• Bank-Insurance Channel “Uniform Reporting and Pricing” Policy
  : Insurance companies are prohibited from paying additional commissions to banks under names such as policy issuance fees or information fees, directly compressing income from agency insurance businesses
• Reduction in Public Fund Custody Fees
  : Weakens the profitability of bank custody businesses
• Weakened Corporate Loan Demand
  : Impacts fee income from corporate settlement businesses

As a regional city commercial bank, Chengde Bank’s fee income dilemma has unique characteristics:

Predicament Dimension	Specific Performance
Customer Structure	Severe loss of high-quality customers, with the qualification of remaining customers declining
Brand Influence	Weaker than large banks, lacking pricing power
Channel Capability	Limited physical outlets, insufficient competitiveness of electronic banking channels
Product Innovation Capability	Weak intermediate business product line, lacking high-value-added products

Chengde Bank relies excessively on investment income to offset fee losses, forming an unhealthy income structure:

2024 Income Structure:
- Net Interest Income: 2.009 billion yuan (YoY -24.7%)
- Investment Income: 1.8 billion yuan (YoY +60%)
- Net Fee and Commission Income: -321 million yuan
- Operating Income: 3.965 billion yuan

Although the strong growth in investment income has filled the income gap in the short term, bond investment income carries the risk of cyclical fluctuations and cannot serve as a stable profit source [1][2].

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Indicator	2023	2024	Change
Non-Performing Loan Balance (100 million yuan)	Approx. 15.10	15.85	+5%
Non-Performing Loan Ratio	1.69%	1.71%	+0.02 percentage points
Special-Mention Loans (100 million yuan)	-	23.12	-
Special-Mention Loan Ratio	-	2.49%	-
Loans Overdue for More Than 90 Days / Non-Performing Loans	-	99%	-
Provision Coverage Ratio	Approx. 240%	248.61%	+8.61 percentage points

• Non-performing loan balance continues to grow, increasing by approximately 5% in 2024 compared to the previous year [1][2]
• Special-mention loans amount to 2.312 billion yuan, accounting for 2.49%, with potential migration risks [2]
• Loans overdue for more than 90 days account for 99% of non-performing loans, indicating that most non-performing loans are severely overdue and difficult to recover [2]

Chengde’s economy has long relied on the following traditional industries:

• Mining
  : Resource-based industries such as iron ore and vanadium-titanium
• Steelmaking
  : Steel smelting and rolling industry
• Metallurgy
  : Non-ferrous metal smelting
• Construction
  : Relying on mining and heavy industry

Industry Type	Loan Proportion	Risk Characteristics
Manufacturing	17.88%	Overcapacity, weak demand
Wholesale and Retail	15.34%	Sluggish consumption, difficulty in capital recovery
Construction	10.49%	Downward real estate market, difficulty in recovering project payments
Mining	8.63%	Fluctuating resource prices, environmental production restrictions
Real Estate	4.209 billion yuan	Industry restructuring, collateral depreciation

, representing a high concentration in cyclical and overcapacity industries [2].

Chengde Bank’s loan distribution is highly concentrated in the local market:

• Proportion of loan balance within Chengde:
  75.3%
  (2024)
• A decrease of 7.43 percentage points from the previous year (2023: 82.73%)
• Although there is a trend of diversification, the concentration remains excessively high [1][2]

According to the China Chengxin Credit Rating Report [2]:

• Chengde Bank’s single customer loan concentration ratio:
  8.49%
  (end of 2024), an increase of 0.98 percentage points from the beginning of the year
• Some large-value loan customers are real estate-related companies
• In view of the structural adjustment pressure faced by the real estate industry, the operating conditions of these loan customers require continuous attention

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Loans overdue for more than 90 days account for 99% of non-performing loans, which means:

• Most non-performing loans have entered a severely overdue state
• The repayment ability of borrowers has deteriorated significantly
• The value of collateral may have depreciated sharply
• Judicial litigation for collection has a long cycle and high costs

Chengde’s economic restructuring has not yet been completed:

• Traditional industries continue to face pressure, with limited growth in new employment and resident income
• Small and medium-sized enterprises face operational difficulties, and their debt-servicing capacity cannot recover quickly
• The real estate market is in a downturn, making collateral disposal difficult

Although the provision coverage ratio remains at a high level of 248.61%, the following points require attention:

• There may be a risk of overstatement compared with the provision requirements under the IFRS9 Expected Credit Loss model
• The balance of loan loss provisions is 3.942 billion yuan, with a provision-to-loan ratio of 4.25%
• There is a potential incentive to under-provision to maintain profits [2]

Measure	Specific Content
Pre-Loan Management	Strictly control new credit extensions to high-risk industries and raise access standards
Mid-Loan Monitoring	Establish an industry risk early warning model to track customer operating conditions in real time
Post-Loan Management	Identify high-risk customers in advance and activate risk resolution plans

Disposal Method	Applicable Scenario	Promotion Suggestion
Collection and Recovery	Customers with willingness to repay but temporary difficulties	Strengthen collection efforts; initiate judicial litigation if necessary
Debt Restructuring	Customers with restructuring value	Adjust repayment plans, extend terms, or waive interest
Asset Transfer	Non-performing asset packages	Conduct bulk transfers through channels such as the China Banking and Insurance Asset Registration and Exchange
Collateral Acceptance	Customers with collateral	Proactively dispose of collaterals such as real estate and land

According to data from the China Banking and Insurance Asset Registration and Exchange, the number of new non-performing personal loan transfers through the exchange surged 260% year-on-year in 2024 [3], reflecting increased activity in the non-performing asset transfer market. Chengde Bank can seize this market opportunity to intensify disposal efforts.

Direction	Measure
Industry Diversification	Reduce concentration in traditional industries such as manufacturing, wholesale and retail
Regional Expansion	Continue to promote the construction of branches inside and outside the province to diversify regional risks
Customer Optimization	Increase support for high-quality small and medium-sized enterprises and micro-enterprises

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Measure	Expected Effect	Implementation Difficulty
Bank Card Business Optimization	Increase card transaction volume and fee income	Medium
Settlement Business Expansion	Expand corporate settlement accounts and transaction volume	Medium
Agency Business Innovation	Expand sales of agency wealth management products and insurance products	High

Chengde Bank should base itself on the characteristics of the regional market to develop distinctive intermediate businesses:

Business Direction	Specific Content	Competitive Advantage
Supply Chain Finance	Carry out accounts receivable financing and bill businesses around core enterprises in Chengde	Familiarity with the local industrial ecosystem
Micro-Finance	Develop integrated service solutions for settlement, financing, and wealth management suitable for micro-enterprises	Short decision-making chain and high efficiency
Government Affairs Finance	Undertake agency businesses such as finance, social security, and housing provident funds for Chengde City and its districts/counties	Strong ties with local governments

• Improve the functions of mobile banking and online banking
• Develop mobile payment businesses
• Build an open banking platform and connect to local life scenarios
• Use big data technology to carry out precision marketing

• Introduce professional talents for intermediate businesses
• Strengthen product training for employees
• Establish performance appraisal and incentive mechanisms

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From 2024 to 2025, Chengde Bank underwent a major management reshuffle [1][2]:

Time	Change Content
2024	Former Chairman Zhang Lei and former Vice President Zhao Guangshu resigned due to retirement
March 2025	Wang Yong was elected Chairman, and Zhang Jianjun was elected Vice Chairman and President
June 2025	The qualification approvals for Guo Ligang and Peng Zhaohua to serve as Vice Presidents were granted

, all promoted internally, reflecting considerations of stable operation and strategic continuity.

In 2024, Chengde Bank saw more than ten changes to its Board of Directors, Supervisory Board, and Senior Management:

• Adjusted and replaced 1 director appointed by the Chengde Municipal Finance Bureau
• Replaced 1 director appointed by Kuancheng Jianlong Mining Co., Ltd.
• Changed the director appointed by Chengde Jinhui Real Estate Development Co., Ltd. to a director appointed by Chengde Tianyun Logistics Co., Ltd.
• Reduced 1 employee director and added 4 independent directors
• Replaced 1 shareholder supervisor and 1 employee supervisor, and added 1 external supervisor [1]

Optimization Direction	Specific Measure
Equity Structure Optimization	Moderately introduce strategic investors to enhance capital strength and business synergy
Connected Transaction Control	Establish more stringent identification and management mechanisms for related parties
Compliance System Construction	Strengthen internal control to prevent compliance risks
Information Disclosure	Improve the transparency and quality of information disclosure

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Challenge Dimension	Specific Performance	Urgency
Fee Income	Negative for 7 consecutive years, cumulative losses exceeding 3 billion yuan	High
Interest Income	Down 24.7% year-on-year in 2024, traditional credit businesses under pressure	High
Asset Quality	NPL ratio of 1.71%, special-mention loans of 2.312 billion yuan	High
Regional Concentration	75.3% of loans disbursed within Chengde	Medium
Income Structure	Excessive reliance on investment income, insufficient stability	Medium

1. Clarify the regional bank positioning of “Rooted in Chengde, Serving Hebei”
2. Formulate a 3- to 5-year transformational development plan
3. Optimize the income structure and reduce reliance on investment income

1. Vigorously develop distinctive businesses such as supply chain finance and micro-finance
2. Accelerate digital transformation and enhance online service capabilities
3. Expand income sources from intermediate businesses

1. Continuously reduce non-performing loans and optimize asset quality
2. Diversify risks from industry and regional concentration
3. Strengthen management of connected transactions

1. Stabilize the management team and maintain strategic continuity
2. Improve the corporate governance structure
3. Strengthen compliance and internal control

As an important city commercial bank in Hebei Province, Chengde Bank faces considerable transformation pressure against the backdrop of regional economic restructuring and intensified competition in the banking industry. The appointment of the new management team brings new opportunities for the bank’s development, but issues such as sustained negative fee income, non-performing loan reduction, and imbalanced income structure still require systematic solutions.

In the future, Chengde Bank should base itself on regional realities, adhere to a differentiated development path, seek a balance between risk prevention and control and business innovation, gradually resolve historical burdens, and enhance sustainable development capabilities. At the same time, it needs to closely monitor regional economic recovery and the progress of real estate industry adjustments, and prepare for risk prediction and response.

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[1] Sina Finance - “Major Reshuffle of Chengde Bank’s Senior Management, Hiding a Cash Cow Business” (https://finance.sina.com.cn/money/bank/gsdt/2025-06-16/doc-infahqxy2954909.shtml)

[2] Huxiu - “Profit, Assets, Transformation: Three Hurdles for Chengde Bank” (https://www.huxiu.com/article/4825559.html)

[3] KPMG - “2025 China Banking Industry Survey Report” (https://assets.kpmg.com/content/dam/kpmg/cn/pdf/zh/2025/06/china-banking-industry-survey-report-2025.pdf)