Quanzhou Bank fined 6.25 million for high non-performing loan ratio and reserve coverage approaching red line

Securities Star Zhao Zixiang

Recently, Quanzhou Bank received a fine of 6.25 million yuan from the Quanzhou Regulatory Branch of the China Banking and Insurance Regulatory Commission, setting a new record for the largest single penalty since the bank’s establishment. Several responsible individuals were also held accountable.

Securities Star notes that in 2025, the bank and its branches were also repeatedly penalized by regulators, including multiple million-yuan fines, highlighting weaknesses in compliance and risk management. On the operational side, performance showed a clear “turnaround” in 2025, with revenue and net profit both declining by double digits. In the third quarter, the bank even posted its first quarterly loss since its renaming in 2009.

Meanwhile, Quanzhou Bank’s asset quality remains under pressure, with non-performing loan ratios fluctuating upward, overdue loans increasing significantly, provisioning coverage ratio continuously declining and approaching regulatory red lines, and capital replenishment facing greater pressure. Additionally, in 2025, the bank’s core management underwent intensive changes, with the chairman and president successively replaced, indicating urgent need for governance restructuring.

Compliance Risks Fully Exposed, Penalties Sound Alarm for Risk Control

On February 14, the administrative penalty information published by the Quanzhou Regulatory Branch of the China Banking and Insurance Regulatory Commission marked an important milestone in Quanzhou Bank’s compliance history. The bank was fined 6.25 million yuan for eight violations, far exceeding its previous maximum penalty of 4.265 million yuan, earning the title of the “largest penalty in the bank’s history,” and revealing multiple loopholes in its compliance and risk management.

According to the regulator’s announcement, the violations involved areas such as lending, data management, internal control construction, including false data on micro and agricultural loans, inadequate risk classification of credit assets, poor management of personal loans, improper deposit absorption, inaccurate EAST data reporting, insufficient due diligence in loan “three checks,” negligence in handling bank acceptance bills, and inadequate data security risk control in third-party cooperation.

In addition to heavy institutional penalties, the then-responsible individual Lin Kunming was banned from working in banking for life. Three other responsible persons received warnings and fines of 50,000 yuan each. This reflects the regulator’s zero-tolerance attitude toward violations by financial institutions.

In fact, this 6.25 million yuan fine is not an isolated incident but a concentrated reflection of ongoing compliance risks exposed over the past year. Public information shows that in 2025, Quanzhou Bank and its branches received three regulatory penalties totaling over 1.6 million yuan, involving the head office, Pingtan Branch, Fuzhou Cangshan Branch, and others, mainly in credit, bill, and anti-counterfeiting areas.

Operational Performance Continues to Decline, Asset Quality and Capital Strength Tested

Alongside the exposure of compliance risks, Quanzhou Bank’s operating performance also declined significantly in 2025, marking a turning point. Revenue and net profit both fell, with the bank even recording a quarterly loss, indicating weakening profitability and risk resistance.

Financial data publicly disclosed show that in the first three quarters of 2025, the bank achieved operating income of 2.396 billion yuan, down 12.54% year-on-year; net profit was 245 million yuan, down 23.03% year-on-year. Both key indicators declined by double digits.

More severely, in the third quarter of 2025, the bank posted a net loss of 13 million yuan, its first quarterly loss since its renaming in 2009, signaling that its profitability has fallen below breakeven and operational pressure has sharply increased.

The downward trend in performance is not sudden but a natural result of sustained profit pressure since 2024. In 2024, the bank achieved operating income of 3.698 billion yuan, up 4.55% year-on-year, and net profit of 656 million yuan, up 0.95%. However, growth slowed significantly, especially net profit, which nearly stagnated.

The core reason for profit decline is an unbalanced revenue structure and shrinking core income sources. As a regional city commercial bank, net interest income is the foundation of Quanzhou Bank’s revenue. But due to the continuous narrowing of industry net interest margins, this core income has shrunk. Data shows that the bank’s net interest margin dropped from 2.07% in 2022 to 1.69% in 2024, squeezing profit margins. In the first three quarters of 2025, net interest income was 1.831 billion yuan, down 155 million yuan or 7.78% year-on-year, weakening the main profit support.

Accompanying the performance decline is ongoing pressure on asset quality. Public data shows that the non-performing loan ratio was 1.52% in 2022, rose to 1.61% in 2023, and further increased to 1.83% at the end of 2024, surpassing its own historical high and exceeding the 1.76% average for Chinese commercial banks in 2024. As of June 2025, the ratio slightly decreased to 1.71%, but still remained above the national average of 1.49%, indicating persistent asset quality pressure.

In November 2025, Orient Jincheng’s rating report noted that due to external environment fluctuations and the weak risk resistance of small and micro customers, the proportion of watchlist loans increased, and asset quality faced downward pressure. Some non-standard investments were overdue, with general coverage of impairment provisions, posing certain credit risk management challenges.

Furthermore, the continuous weakening of risk absorption capacity worsens the bank’s operating situation. The provision coverage ratio, a key indicator of risk buffer capacity, has been declining for years: 170.81% in 2022, down to 168.01% in 2023, 163.23% at the end of 2024, and 158.7% in the third quarter of 2025—close to the regulatory bottom line of 150%, with risk resilience under continued pressure.

Regarding capital adequacy, although the bank still meets the minimum regulatory requirements, growth momentum is insufficient, and capital replenishment remains a challenge. At the end of 2024, the core Tier 1 capital adequacy ratio was 9.33%, Tier 1 capital ratio 11.16%, and total capital adequacy ratio 14.12%. In the first quarter of 2025, these slightly rebounded, but by the third quarter, the capital adequacy ratio fell to 13.76%, down 0.36 percentage points from the end of 2024, with net capital decreasing from 17.13 billion yuan at the end of June to 16.57 billion yuan at the end of September.

Profit decline weakens internal capital accumulation, while non-performing loan disposals consume capital, increasing external financing needs. As a regional city commercial bank, external financing options are limited, further constraining risk management and business transformation.

Management restructuring also adds uncertainty to the bank’s development. Since 2025, the bank has experienced multiple leadership changes: in the first half, Vice President Tang Jinjun stepped down as Secretary of the Board, and General Manager of HR Ye Xuyin took over; in the third quarter, Chairman Lin Yangfa retired, and Jiang Wenpeng was nominated as Chairman. In December, Li Mingqin, with experience at Agricultural Bank of China and Huaxia Bank, was approved as the new president, forming a new core management team. While these leaders have large bank backgrounds and compliance experience, frequent high-level changes may weaken internal control stability, and governance restructuring will take time.

For Quanzhou Bank, the new leadership offers hope for overcoming difficulties. However, the primary task remains to strengthen compliance and risk control, address internal control weaknesses, and embed risk management into all aspects of business development to achieve sustainable growth.