China Zheshang Bank can withstand H1 profit decline: S&P

Risk appetite has reduced compared to previous years.

China Zheshang Bank can absorb dip earnings in the first half of 2025 thanks to its stable asset quality and capital adequacy, said S&P Global Ratings.

“We expect Zheshang Bank's credit loss to continue to decline, easing recent pressure on earnings,” the ratings agency said in a press release on 1 September 2025.

However, contracting net interest margin (NIM) and volatile non-interest income will weigh on Zhengshang Bank’s profitability, it added.

The bank’s revenue dropped 5.8%, whilst net profit fell by 3.3%, in the first six months of 2025 compared to the same period last year. This was blamed on loan growth slowing down and reduced income from fees and commissions.

Investment returns also fell from its high base and a dip in bond prices in 2025, S&P said.

Meanwhile, Zheshang Bank’s risk appetite has reduced compared with previous years, S&P said. This is reportedly reflected in the bank trimming its exposure to high-risk assets, resulting in slower loan growth.

The bank’s property loans dropped by 4.3% at end-June 2025 compared with end-2024. Personal business loans also declined by 9.3%, whilst high-risk internet-based loans fell by 18% over the same period.

“Zheshang Bank's constrained risk appetite will support its capital adequacy. The slower loan growth and declining share of high-risk assets will reduce capital consumption,” it said.