Zheshang Bank's performance plummets, with new management accelerating the clearance of historical burdens

Ask AI · How can the new management team combine business and regulatory experience to address challenges?

Produced by | Damo Finance

After the chairman and president were both replaced, Zheshang Bank delivered a report card with “double decline” in revenue and net profit.

On March 30, Zheshang Bank (601916.SH) released its 2025 annual report showing that the bank achieved operating income of 62.51B yuan for the year, down 7.59% year-on-year, and net profit attributable to the parent of 12.93 billion yuan, down 14.85% year-on-year.

Since its establishment in 2004, this is the first time the bank has experienced “double decline” in both revenue and net profit. The last time its revenue declined year-on-year was back in 2007, and the growth rate of net profit was the first to fall by more than double digits.

As of April 1, among the 29 listed banks that have disclosed annual reports, Zheshang Bank ranked second to last in revenue growth and last in net profit attributable to the parent.

It is worth noting that Zheshang Bank has lost its position as the “biggest Zhejiang-based bank.” In the second quarter of last year, Ningbo Bank’s total assets surpassed Zheshang Bank. By the end of the year, Ningbo Bank’s assets reached 3.63 trillion yuan, nearly 1.5 trillion yuan higher than Zheshang Bank.

Last year, Zheshang Bank successively replaced its chairman and president. During the annual performance briefing, Chairman Chen Haiqiang and President Lü Linhua made their first official appearances. Regarding the financial report, Chen Haiqiang said they “met the board’s budget targets.” He stated that Zheshang Bank has not blindly pursued scale obsession, nor overly focused on short-term performance to “make quick money,” nor taken the old path of “building big clients,” but instead adhered to long-termism, strengthening the foundation, adjusting the structure, enhancing compliance, and controlling risks.

In fact, Zheshang Bank has been actively clearing its historical baggage in recent years. During Shen Renkang’s tenure as chairman, the bank relied on a “loan-investment linkage” approach to achieve rapid asset expansion, but this also buried many risk hidden dangers.

After Shen Renkang stepped down in 2022, Lu Jianqiang was parachuted in as chairman, spending three years clearing historical risks. Lu Jianqiang publicly stated that during his three years in charge, he was basically “crossing through storms,” during which Zheshang Bank continuously resolved non-performing assets, essentially eliminating the 200 billion yuan of bad assets formed by shadow banking activities.

Now that the historical baggage has been gradually lifted, 2026 can be considered a fresh start for Zheshang Bank, and the low base in 2025 also leaves more room for its performance to improve in 2026.

Profit slowdown due to transformation

Zheshang Bank’s net interest income and non-interest income both declined last year, leading to a decrease in operating income.

In 2025, Zheshang Bank achieved a net interest income of 36.3k yuan, down 1.55% year-on-year. This marks the second consecutive year of decline in net interest income. Although the rate of decline has significantly narrowed compared to the previous year, interest income still accounts for 71.12% of the bank’s total revenue, which has a considerable impact on overall performance.

Zheshang Bank’s credit business performance in 2025 was not weak. Last year, the bank launched a new round of “deepening Zhejiang” efforts, providing nearly 1.2 trillion yuan in financing services for the entire province. Two-thirds of the new loans in the year were invested within the province, promoting an increase in credit scale.

Lü Linhua also stated at the performance briefing that the economy is still in a weak recovery phase, with effective credit demand gradually recovering. The trend of narrowing bank interest margins continues, and Zheshang Bank’s overall trend remains consistent with the industry.

Compared to interest income, non-interest income declined more sharply, reaching 150B yuan in 2025, a decrease of 19.73%. Among them, net fee and commission income fell 16.38% to 44.46B yuan; other non-interest income fell 20.57% to 12k yuan.

Lü Linhua explained that, compared to the single-sided market in 2024, bond markets in 2025 experienced wide fluctuations and increased volatility, significantly impacting the bank’s trading financial assets income, resulting in nearly 20% decline in non-interest income.

The annual report also shows that last year, fair value changes in financial assets turned from profit to loss, plunging 135.69% compared to 2024, erasing nearly 5 billion yuan of income just from this item.

In addition, Zheshang Bank’s provisioning coverage ratio in 2025 decreased by 23.3 percentage points from the previous year, with an under-provision of more than 3.8 billion yuan, yet it still could not smooth out much profit.

It is noteworthy that Zheshang Bank’s approach has changed significantly from before. During Shen Renkang’s era, the strategy was “high-risk pricing to cover high liability costs.” Now, the bank has abandoned the “scale obsession” and shifted to a “low-risk, average return” strategy, proactively adjusting asset allocation, reducing high-risk assets, and optimizing the asset-liability structure for long-term steady development.

The cost of this transformation is reflected in short-term performance pain, with net interest margin decreasing by 0.11 percentage points to 1.60% in 2025. Lü Linhua also admitted at the performance briefing that this strategy has caused temporary pressure on net interest margin and overall revenue.

New management team takes over

In 2025, Chairman Lu Jianqiang, tasked with clearing the historical baggage, retired upon reaching retirement age, and Zheshang Bank underwent a major management overhaul, completing a new round of leadership changes from top to bottom.

In December last year, then-CEO Chen Haiqiang was nominated as chairman and resigned from his CEO position. Lü Linhua was nominated as CEO. Meanwhile, Lin Jingran, Wang Chaoming, Hou Bo, and others resigned from vice chairman, assistant to the president, and other roles. The original assistant to the president, Zhou Weixin, and Pan Huafeng, were nominated as vice chairmen, and the assistant to the president position was abolished.

Currently, Zheshang Bank’s new “one chairman, four vice presidents” structure is stable: Chairman Chen Haiqiang, President Lü Linhua, Vice Presidents Zhou Weixin, Jing Feng, Luo Feng, and Pan Huafeng.

Chen Haiqiang, 52, has extensive experience in the financial industry, having worked at ICBC, China Investment Bank, China Development Bank, and China Merchants Bank. In 2015, he joined Zheshang Bank and served as president of the Ningbo branch, Hangzhou branch, and vice president. He was appointed president of Zheshang Bank in April 2025.

In February this year, Chen Haiqiang’s qualification as chairman was approved by regulators. This also means he is the first internally promoted leader of Zheshang Bank since its founding.

Lü Linhua, 48, joined Zheshang Bank after serving as vice president of Zhejiang Rural Commercial Bank. According to public information, Lü Linhua previously worked mainly in regulatory agencies, including roles such as director of the Zhejiang Insurance Regulatory Bureau office and director of the policy and regulation department of Zhejiang Banking and Insurance Regulatory Bureau, with many years of experience in risk management and compliance operations. However, his qualification as Zheshang Bank’s president has not yet been approved by regulators.

Looking at the backgrounds of Chen Haiqiang and Lü Linhua, this new combination features one who understands business and one who understands regulation, perfectly aligning with the two core focuses of “steady operation” and “risk control.”

From their statements, Zheshang Bank’s future work will focus on the “1155” management strategy, adhering to one main line, one capability, five-dimensional overall planning, and five-group coordination.

That is, maintaining a customer-centric comprehensive operation as the main line; building enterprise-level industry research capabilities; systematically coordinating five dimensions: customer groups, risks, structures, benefits, and scale; strengthening the linkage between corporate and financial markets, stock and flow, interest and non-interest, domestic and overseas, basic and value-added services; and focusing on transforming into a lightweight bank, leveraging domestic and international coordination to serve the global development needs of Zhejiang merchants.