AI · Qu Zhenghe Appointed as President: How Will He Respond to Zijin Bank’s Performance Decline?

Among listed banks in the Jiangsu-Zhejiang region, Zijin Bank’s current performance trend is not very promising.

Last year’s third quarter saw the bank’s performance sharply decline after a brief period of growth in the first half of the year, with non-performing loan ratios rising in Q3 and increased provisioning consumption.

Coincidentally, in Q3 of last year, the bank nominated Qu Zhenghe as President and concurrently as Chief Compliance Officer. Recently, the bank announced that his appointment has been approved by regulators.

A Tumultuous Performance Last Year

Although Zijin Bank has not yet released its 2025 earnings forecast, based on the first three quarters’ results, the bank faced significant operational pressure last year, with profits struggling and performance fluctuating.

In Q1 2025, Zijin Bank’s performance showed increased profits but decreased revenue. The bank’s main operating income was 1.141 billion yuan, down 4.82% year-over-year; net profit attributable to shareholders was 422 million yuan, up 4.04%; net non-interest income was 424 million yuan, up 4.58%. This revenue decline marked the first quarterly revenue drop in nearly four years, with profit growth mainly driven by reduced credit impairment losses.

By the end of the first half, revenue and net profit barely increased in tandem, with operating income of 2.393 billion yuan, up 0.49%, and net profit of 912 million yuan, up 0.12%. While it appears that performance improved, the reality is less optimistic: interest income and net interest income declined simultaneously, and the slight growth in non-interest income from fees, commissions, and investment gains was not enough to sustain overall revenue growth. If interest income does not improve, as a rural commercial bank, the sustainability of non-interest income growth is questionable.

As expected, performance sharply declined by the end of Q3. For the first three quarters, the bank’s operating income was 3.273 billion yuan, down 5.42% year-over-year; net profit attributable to shareholders was 1.204 billion yuan, down 10.9%. The decline was severe, with Q3 alone seeing an 18.44% drop in quarterly operating income and a 33.73% decrease in net profit attributable to shareholders—almost catastrophic.

During recent years of declining interest rates, banks that managed to grow interest income mainly relied on scale expansion. Zijin Bank’s interest income fell, indicating that loan growth was also not ideal.

As of the end of Q3 2025, Zijin Bank’s total assets increased by 5.96% from the previous year, but total loans grew only 1.86%, with slight increases in corporate loans and declines in retail loans and discounts.

Asset Quality Still Uncertain

Some banks tighten lending due to capital shortages, but Zijin Bank does not fall into this category. Its core Tier 1 capital adequacy ratio was 10.82% at the end of Q3, slightly higher than the previous year.

The reason for its tightened lending is partly related to asset quality and partly due to increased difficulty in market expansion.

From static data, the bank’s asset quality is not particularly poor. At the end of Q3, its non-performing loan ratio was 1.35%, and the loan loss coverage ratio was 184.81%, placing it in the middle-lower acceptable range.

However, it’s important to note that the NPL ratio increased somewhat in Q3, and provisioning consumption was significantly higher than in the first half, even before accounting for a slight increase in credit impairment provisions.

Additionally, both special mention and loss loans increased from the start of the year to Q3, indicating potential future growth in NPL balances and provisioning needs. Under these circumstances, Zijin Bank must be cautious in client selection.

On the other hand, obtaining high-quality clients is highly competitive in the current environment. After recent economic transformations, some traditional industry clients have become riskier, while emerging industries face high specialization and rapid iteration. For banks that prefer stable, promising clients, client selection has become more difficult. Most top-tier clients are now captured by large banks, making it harder for rural commercial banks to access quality clients.

Meanwhile, due to increased credit risks among individual customers, banks have generally tightened consumer loans and other personal banking services. Zijin Bank’s personal loan balances have also declined compared to the start of the year.

However, it’s also possible that Zijin Bank has actively increased the conversion of non-performing loans and provisioning consumption. How to interpret this? It relates to the bank’s personnel changes last year, when the board approved the appointment of Qu Zhenghe as President in August.

Qu Zhenghe, born in August 1975, is a seasoned banking professional with extensive experience in rural credit systems. His resume includes roles such as Deputy Head of Funds Operations at Siyang Rural Credit Cooperative, General Manager of Funds Operations and Branch Manager at Peixu Rural Bank, General Manager of Credit Management at Siyang Rural Cooperative Bank, Deputy Director of the Rural Credit Union of Hongze County, and various senior positions at Jiangsu Rural Credit Union. Currently, he is General Manager of Business Management (Inclusive Finance) at Jiangsu Rural Commercial Bank and Deputy Party Secretary of Zijin Bank.

On March 17, this year, Zijin Bank announced that Qu Zhenghe’s appointment was officially approved. The whereabouts of his predecessor, Shi Wenxiong, remain unknown.

Public records show Shi Wenxiong was born in January 1972 and previously served as Deputy Director of Liyang Rural Credit Cooperative, Vice President of Liyang Rural Bank, General Manager of the Agriculture and Rural Business Department at Jiangnan Rural Commercial Bank, Vice President, and President. He became President of Zijin Rural Commercial Bank in August 2020 and has been recognized as a leading figure in promoting innovation in Nanjing’s financial industry, even being named a model worker in Nanjing in 2025.

Returning to the main point, why is it believed that Zijin Bank deliberately increased bad loan provisions in Q3? There is an industry secret: whenever core leadership changes, bad loans tend to “explode” temporarily—likely to ensure cleaner assets for the current leadership team. Whether Zijin Bank falls into this pattern is uncertain.

Alongside Qu Zhenghe’s appointment, the board also approved the appointment of Wei Ying as Vice President, approved in August 2025, with her regulatory approval granted in October last year.

Wei Ying, born in September 1985, has risen from grassroots banking roles. Her resume includes positions such as Teller and Customer Manager at Zijin Rural Commercial Bank’s Yueyang Lake Branch, Compliance Officer, Branch Manager at Yangzhou Branch, and Branch Manager at Xuanwu Branch.

Apart from the head office and main branch, Zijin Bank has 12 branches. Due to its small size, it generally receives fewer penalties than larger banks, but problems still exist.

In July last year, the Jiangsu branch of the People’s Bank of China issued an administrative penalty (Su Yin Fa Decision [2025] No. 18–20) to Zijin Bank for violations related to financial statistics, account management, merchant management, payment terminal management, anti-counterfeiting, currency circulation, and credit information collection. The bank was warned, fined 2,402,000 yuan, and its illegal gains of 20.22 yuan were confiscated.

The then General Manager of Electronic Banking, Sha, was warned and fined 50,000 yuan for violations in merchant management; the General Manager of Inclusive Finance, Yao, was fined 100,000 yuan for credit information management violations. These penalties were publicly announced for three and five years, respectively.

Given the small illegal gain of 20.22 yuan, such a severe penalty seems “not worth it.”

As President, Qu Zhenghe’s main task is to manage the bank’s operations, hopefully avoiding similar “basic errors.”

Note to readers: This article is based on publicly available information and interviews. Global Finance and the author do not guarantee the completeness or accuracy of the data. Under no circumstances does this content constitute investment advice. Markets are risky; invest cautiously! Reproduction or plagiarism without permission is prohibited!