Bank of Chongqing (BCQ) recently released its Q3 financial report, showcasing solid performance under Chairman Yang Xiuming's leadership over the past 18 months, with assets surpassing the trillion-yuan milestone. However, as a leading regional commercial bank in western China, BCQ still faces challenges in business structure and risk management.

**1. Growth Amid Fee-Based Business Weakness** Following a series of management reshuffles in early 2024, Yang Xiuming took the helm in February 2024. Under his leadership, BCQ’s recovery gained momentum. The bank reported Q3 revenue of RMB11.74 billion (+10.4% YoY) and net profit of RMB4.879 billion (+10.19% YoY), marking the highest growth since 2022. Q3 alone saw revenue jump 17.38% to RMB4.081 billion, with net profit surging 20.54% to RMB1.69 billion.

Stabilized net interest margins (1.32% in Q3 2025 vs. 1.35% in 2024) and accelerated balance sheet expansion (total assets up 19.39% to RMB1.02 trillion) drove interest income growth above 15%. However, the capital adequacy ratio dipped to 8.57%, nearing the regulatory redline of 7.5%, raising refinancing urgency. Meanwhile, fee-based income remained weak, with net fees and commissions down 27.59% to RMB559 million, accounting for just 4.76% of total revenue.

BCQ’s stock has rebounded 70% since 2024, with market cap nearing RMB38.5 billion. Yet behind the growth lie two critical challenges: asset quality and business imbalance.

**2. Lingering Asset Quality Concerns** While BCQ’s non-performing loan (NPL) ratio improved to 1.14% in Q3, retail lending risks escalated. Retail NPLs rose to 3.01% in H1 2025, driven by SME loans (6.23% NPL) and credit cards (4.19% NPL). Mortgage NPLs hit 1.77%, higher than peers like Jiangsu Bank. Retail loans stagnated at RMB976.18 billion in 2024, with consumer loans (20% share) offsetting declines elsewhere.

Corporate loans (75.73% of total) showed a 0.9% NPL ratio, but manufacturing (1.99%) and real estate (7.19%) remained problematic. A RMB500 million private bond default by Aipu Realty in 2021 highlighted ongoing risks.

**3. Structural Imbalances and Regulatory Scrutiny** BCQ’s rapid expansion exposed risk control gaps, resulting in regulatory penalties. On October 22, it was fined RMB2.2 million for lax loan due diligence. Earlier in 2024, it faced fines for improper fund usage and inadequate government project oversight.

Corporate lending is overly concentrated in traditional sectors like leasing (32.45%) and public utilities (24.11%), while emerging industries (e.g., tech, manufacturing) account for under 12%. Though government-backed loans offer stability, BCQ risks missing growth opportunities in high-potential sectors.

**Competitive Gap** BCQ trails Chongqing Rural Commercial Bank (CRCB) in scale (RMB1.66 trillion assets) and profitability (RMB21.658 billion revenue in Q3). Addressing capital adequacy, asset quality, and diversification will be pivotal for sustained growth.

While Q3 results are commendable, unresolved structural and risk management issues cast doubt on BCQ’s ability to maintain momentum.