Nearly 10 months after its previous transaction, Guangzhou Rural Commercial Bank (GRCB, 01551.HK) is preparing to sell almost 20 billion yuan worth of credit assets at a discount once again.

Recently, GRCB announced on the Hong Kong Stock Exchange that its board of directors has approved the public listing and transfer of debt assets - specifically credit assets held by the bank - on a property rights exchange.

The assets have a principal amount of approximately 14.978 billion yuan, with total debt amounting to around 18.928 billion yuan. The bank preliminarily expects to sell these assets for no less than 12.2 billion yuan. GRCB will also convene an extraordinary general meeting in the near future to seek shareholder approval for this transaction.

"Upon completion of this transaction, it will effectively enhance the bank's risk resilience, improve operational efficiency and profitability, while optimizing our business structure and asset quality, laying a foundation for achieving overall stable operations and long-term development," GRCB stated in the announcement.

**18.9 Billion Yuan Debt Rights to be Transferred at 80% Discount**

Specifically, as of the end of June 2025, this credit asset portfolio had a principal amount of approximately 14.978 billion yuan, corresponding interest totaling about 3.897 billion yuan, advanced judicial fees totaling approximately 51 million yuan, and penalty fees totaling about 2 million yuan, for a combined total of approximately 18.928 billion yuan.

However, after considering factors such as accrued interest receivable and asset impairment provisions, the unaudited book value of these credit assets is approximately 12.132 billion yuan.

By industry classification, the credit assets are primarily concentrated in leasing and business services (38.78%), real estate (20.46%), and wholesale and retail (16.27%), involving principal balances of 5.808 billion yuan, 3.064 billion yuan, and 2.437 billion yuan respectively.

Regarding the sale price, GRCB expects to sell these assets for no less than 12.2 billion yuan, representing a principal discount rate of approximately 80%, with a slight premium of 68 million yuan over book value.

GRCB indicated that the funds raised from selling these assets will be used for the bank's general operating capital. The asset transfer will effectively reduce the non-performing loan ratio and provision requirements while improving profitability levels.

**Accelerating Disposal of High-Risk Assets**

This marks the second time in nearly a year that GRCB has sold substantial credit assets at a discount.

Previously, in November 2024, GRCB announced the transfer of credit assets and other assets totaling approximately 14.592 billion yuan in debt, mainly involving loans to the real estate industry and wholesale/retail sectors. In December of the same year, the bank sold these assets to Guangzhou Asset Management Co., Ltd. at a discounted price of 9.993 billion yuan.

This series of discounted asset sales reflects the ongoing pressure on the bank's asset quality. According to the interim report, as of the end of June 2025, the bank's non-performing loan ratio stood at 1.98%, up 0.32 percentage points from the end of the previous year. Non-performing loan balances reached 14.219 billion yuan, an increase of 2.269 billion yuan from year-end.

In its interim report, GRCB stated that the bank will improve its credit responsibility management mechanism, revise measures for credit business operators' primary responsibility, standardize responsibility division standards, and introduce detailed rules for due diligence and liability exemption in small and medium-sized corporate credit, inclusive credit, and retail credit businesses, tightening risk control responsibilities and fostering a positive credit culture of "daring to lend, being able to lend, and willing to lend."

"Meanwhile, we will intensify efforts to dispose of non-performing assets, revise non-performing asset management measures, and accelerate the disposal and collection of high-risk assets through debt transfers, write-offs, and debt-to-asset conversions," GRCB stated.

According to the interim report, in the first half of 2025, GRCB achieved operating revenue of 8.037 billion yuan, up 9.41% year-on-year, while net profit attributable to shareholders reached 1.374 billion yuan, down 6.83% year-on-year.