There is a striking contrast at Hua Xia Bank Co., Limited (SH: 600015) right now. Its dividend yield exceeds 6%, placing it among the top tier of the 42 listed banks on the A-share market. Yet, its price-to-book (PB) ratio stands at just 0.33 times, ranking it third from the bottom within that same group.

For investors, a high dividend yield combined with a low share price might appear to offer an attractive "value proposition." If one anticipates that the valuation will not decline further, the substantial dividend yield could also provide a relatively stable return outlook.

To understand this paradox, one must deconstruct the dividend yield formula. The numerator is the per-share dividend. In 2025, Hua Xia Bank distributed a total cash dividend of 6.684 billion yuan, representing 24.57% of its net profit attributable to shareholders. While this payout ratio has been stable in recent years, it is not particularly high when compared to the industry standard of around 30%. Therefore, the factor truly pushing the dividend yield above 6% is likely the denominator—a share price that has persistently traded below its net asset value per share. According to data from Flush, as of the close on August 19, 2026, Hua Xia Bank's share price was 6.59 yuan. Based on the 2025 annual cash dividend of 0.42 yuan per share, its static dividend yield is approximately 6.37%.

The fact that high dividends have failed to support the valuation suggests that the market's concerns extend beyond just the current payout. Fundamental factors such as the stability of profitability and the solidity of asset quality are equally important. An examination of the bank's recent operating fundamentals may provide insight into the reasons behind its "high dividend, low valuation" situation.

Assets Surge to 4.74 Trillion Yuan, Yet Revenue and Profit Decline Simultaneously

In terms of asset scale, Hua Xia Bank is expanding at a relatively rapid pace. By the end of 2025, its total assets reached 4.74 trillion yuan, an increase of 8.25% year-on-year. Total loans grew by 8.47% to 2.57 trillion yuan, a faster growth rate primarily driven by a 13.88% expansion in corporate loans. Total deposits increased by 10.71% to 2.38 trillion yuan.

However, contrasting with the expansion in assets, its operating performance saw its first simultaneous year-on-year decline in both revenue and net profit in recent years. In terms of operating revenue, after reversing a consecutive decline since 2022 with a 4.23% positive growth in 2024, the bank saw revenue fall again in 2025, dropping 5.39% year-on-year to 91.914 billion yuan. This figure is not only lower than the 93.808 billion yuan recorded in 2022 but also marks the lowest level since 2020.

On the profit front, the bank achieved a net profit attributable to shareholders of 27.2 billion yuan in 2025, a 1.72% decrease year-on-year, marking its first negative growth since 2020. Breaking down the revenue structure reveals the crux of the issue. In 2025, the bank's net interest income was 62.948 billion yuan, a slight increase of 1.43% from the previous year. However, over a longer timeframe, this income stream has been on a continuous decline since 2020 when it stood at 81.967 billion yuan. As net interest income constitutes nearly 70% (68.5%) of total revenue, its persistent decline is the primary reason for sluggish revenue growth. Concurrently, the net interest margin has fallen steadily from 2.59% in 2020 to 1.56% in 2025. The return on equity (ROE) has also been on a fluctuating downward trend since 2021, decreasing from 9.04% to 8.32%.

Another significant factor in the 2025 revenue decline was a substantial drop in net non-interest income. This figure fell by 6.117 billion yuan, or 17.44%, to 28.966 billion yuan for the year. This was primarily dragged down by fair value change losses, which swung from a gain of 7.912 billion yuan in 2024 to a loss of 3.535 billion yuan in 2025. The bank attributed this to "fair value changes primarily caused by capital market fluctuations" in its annual report.

Retail Business Contracts and Personal Loan Risks Escalate

Meanwhile, pressure on Hua Xia Bank's retail operations continues to intensify. As of the end of 2025, its credit card loan balance was 151.086 billion yuan, down 10.75% year-on-year. The total annual credit card transaction volume fell by 14.29% to 710.326 billion yuan, and credit card business revenue decreased by 15.65% to 14.459 billion yuan. All three indicators saw double-digit declines, indicating a contraction in both business scale and revenue. Risks related to non-performing personal loans are also rising. By the end of 2025, the bank's total non-performing loan (NPL) balance was 39.886 billion yuan, up 5.2% from the end of the previous year. The overall NPL ratio was 1.55%, a decrease of 0.05 percentage points year-on-year. However, the NPL ratio for personal loans remained high at 2.11%, an increase of 0.31 percentage points year-on-year. The NPL balance for personal loans rose by 1.714 billion yuan to 14.732 billion yuan.

In its 2025 annual report, the bank explained the rise in the personal loan NPL ratio, stating, "Affected by the external risk environment, the income levels and repayment capabilities of some debtors have declined." The intensity of retail risk disposal can also be observed in the bank's transfer of non-performing assets. Since 2026, a review of announcements on the National Credit Registry Center website reveals that Hua Xia Bank has been involved in 7 credit card NPL projects and 1 personal consumption loan project from its Beijing branch, with a combined outstanding principal and interest of approximately 11.389 billion yuan.

Furthermore, several capital and provision indicators have weakened simultaneously. As of the end of 2025, the bank's capital adequacy ratio was 13.16%, down 0.28 percentage points year-on-year. Its core tier 1 capital adequacy ratio fell 0.39 percentage points to 9.38%, and its provision coverage ratio decreased by 18.59 percentage points to 143.30%. By the end of the first quarter of 2026, the capital adequacy ratio had further declined to 12.53% and the core tier 1 capital adequacy ratio to 8.97%, although the provision coverage ratio rebounded to 146.37%.

In response to its depressed valuation, Hua Xia Bank attempted to bolster market confidence with a "Valuation Enhancement Plan" on March 31. However, judging by subsequent market performance, the plan did not effectively lift its valuation. The bank itself acknowledged in the plan that "it is merely an action plan and does not represent a commitment to any targets or matters such as performance, share price, or major events. Performance and secondary market performance are influenced by numerous factors including the macroeconomic environment, industry policies, and market conditions, and there is uncertainty regarding the achievement of related goals." For this established joint-stock bank, a 6% dividend yield may attract some capital in the short term, but the market's re-rating of its value is still contingent upon it rediscovering its growth momentum.