BANK OF JIUJIANG (06190.HK) recently disclosed an announcement stating that its largest shareholder, the Jiujiang Municipal Finance Bureau, and its third-largest shareholder, Industrial Bank Co., Ltd., intend to participate in its non-public issuance in proportion to their shareholdings, providing a "blood transfusion" to replenish the bank's core tier-1 capital.
As the first prefecture-level city commercial bank in central China to list in Hong Kong, BANK OF JIUJIANG's core tier-1 capital adequacy ratio stood at 8.63% as of the end of September 2025, a decrease of 0.81 percentage points from the end of the previous year, significantly below the industry average, indicating a continued narrowing of its capital buffer space.
This private placement carries a strong sense of emergency response. However, it faces uncertainties in fundraising due to a lack of substantive progress in the H-share issuance and a persistently low stock price, further reflecting multiple deep-seated operational challenges. These include an inability to stem capital consumption despite business contraction, significant pressure from non-performing asset disposal, shortcomings in internal controls and compliance, and instability at the shareholder level.
As the second prefecture-level city commercial bank nationwide and the first in central China to list in Hong Kong, BANK OF JIUJIANG's path to capital replenishment has been fraught with anxiety. At the end of 2022, its core tier-1 capital adequacy ratio fell to 7.93%, approaching the regulatory minimum of 7.5%, forcing the bank to launch its first post-IPO capital increase plan. A fundraising of nearly 4 billion yuan by the end of 2023 barely alleviated the pressure, raising the ratio to 9.44% by the end of 2024.
However, this relief lasted less than a year before the bank's capital adequacy ratios began declining again. By the end of June 2025, the core tier-1 capital adequacy ratio dropped to 8.62%, edging slightly down to 8.63% by the end of September, merely 1.13 percentage points above the regulatory minimum. The total capital adequacy ratio also fell significantly by 1.96 percentage points from the end of 2024 to 11.21%, indicating a continuous contraction of the capital buffer.
Notably, BANK OF JIUJIANG's capital depletion presents a rare paradox of "capital loss despite balance sheet contraction." While capital consumption in banks typically accompanies credit expansion, BANK OF JIUJIANG finds itself in a peculiar cycle where its net capital is under pressure even as its business shrinks. By the end of the third quarter of 2025, the bank's interest-earning assets had shrunk to 358.3 billion yuan from 478.59 billion yuan at the end of 2024, a reduction of over 120 billion yuan and a decline of 25.1%, far exceeding the average contraction rate among city commercial banks. Despite actively scaling back its business, the capital adequacy ratio continued to fall.
Data shows that in 2023, BANK OF JIUJIANG's credit impairment losses were already as high as 6.32 billion yuan. For the first three quarters of 2025, asset impairment losses remained elevated at 4.57 billion yuan. This implies that a significant portion of the income generated from net interest margins is being used to cover bad debt gaps left from previous aggressive expansion, rather than being retained as core capital.
In the first three quarters of 2025, the bank achieved operating revenue of 8.03 billion yuan, a year-on-year decrease of 4.04%. Although net profit was 866 million yuan, turning positive with a year-on-year growth of 3.94%, this profit growth did not stem from improvements in core operations. Instead, it relied on short-term supports such as a 3.28 billion yuan reduction in asset impairment losses compared to the previous year and a sharp 150.33% surge in financial investment income, indicating extremely weak profit stability.
Against this backdrop, the new private placement plan launched by BANK OF JIUJIANG on October 31, 2025, became an inevitable choice. The bank plans to issue up to 860 million domestic shares and 175 million H-shares. If issued at the maximum amount, the total share capital would increase by 36.4%. All proceeds are intended to replenish core tier-1 capital, estimated to add 3-4 billion yuan, potentially raising the core tier-1 capital adequacy ratio back above 9.5%.
More critically, the H-share portion of the issuance has yet to see substantive progress. Coupled with the bank's low H-share stock price, there remains significant uncertainty about whether the subsequent fundraising scale can meet its targets.
Public information shows that BANK OF JIUJIANG, originally named Jiujiang City Commercial Bank, was established on November 18, 2000, and listed on the Main Board of The Stock Exchange of Hong Kong Limited on July 10, 2018. It was the second prefecture-level city commercial bank nationwide, the first in central China, and the first in Jiangxi Province to list on the HKEX Main Board.
As of the end of June 2025, BANK OF JIUJIANG had established a head office, 13 branches, and 265 sub-branches. It was also the primary initiator in setting up 20 village and township banks across five provinces/municipalities, including Beijing, Jiangsu, Shandong, Guangdong, and Jiangxi, such as Beijing Daxing Jiuyin Village Bank and Zhongshan Xiaolan Village Bank.
The core reason for the persistent pressure on BANK OF JIUJIANG's capital adequacy indicators is related to fundamental weaknesses in its asset quality. At the end of 2024, the bank's non-performing loan (NPL) ratio climbed to 2.19%, a five-year high. Overdue loans surged by 47.4% year-on-year, and its NPL ratio was 0.71 percentage points higher than the average 1.48% for commercial banks during the same period, indicating significantly higher risk exposure than the industry average.
Although the NPL ratio was barely reduced to 1.88% by the end of June 2025 through high-intensity write-offs, it still exceeded the average of 1.84% for city commercial banks. Furthermore, the effectiveness of this risk reduction lacks sustainability. As of the end of June 2025, the bank's "special mention" loans amounted to 18.886 billion yuan, accounting for 5.79% of its portfolio, far exceeding the industry average. This suggests a large volume of assets remain on the brink of risk, posing substantial pressure for future NPL rebound.
The debt overdue by local AMC Guohou Assets serves as a typical example of the deterioration in BANK OF JIUJIANG's asset quality. Since establishing a cooperative relationship in 2015, BANK OF JIUJIANG has provided various financing support to Guohou Assets. However, in February 2025, Guohou Assets announced a default on 720 million yuan of debt owed to BANK OF JIUJIANG. This amount represents 80.8% of the bank's net profit for the first three quarters of 2025, directly impacting its profitability.
A closer look at the financial data reveals that Guohou Assets is already trapped in a liquidity crisis. As of mid-2025, its cumulative losses over three and a half years approached 2 billion yuan. Its book cash amounted to only 69.557 million yuan, while short-term debt due within one year was as high as 970 million yuan, resulting in a cash coverage ratio of merely 7%. Total overdue debt of 2.46 billion yuan accounted for 59.3% of its net assets at the end of the previous year. More棘手的是, the actual controller of Guohou Assets has pledged their equity to BANK OF JIUJIANG, creating a deep entanglement of debt and equity. This risk exposure has become a latent hazard on BANK OF JIUJIANG's asset side.
The deterioration in asset quality is accompanied by persistent failures in internal controls and compliance, further eroding market trust. The "bride price loan" controversy in March 2021 marked a turning point in the bank's reputation. Employees at the Ganzhou branch privately designed marketing materials hinting that loans could be used for bride prices, touching upon social norms. Although an investigation confirmed it as improper marketing and responsible personnel were dealt with, the public sentiment continued to ferment, damaging the bank's reputation.
Furthermore, consumer complaints against the bank have been rising steadily in recent years. From late 2025 to early 2026, multiple borrowers reported issues on consumer protection platforms, including violent debt collection by third parties after defaults, leakage of contact list information, duplicate credit card charges, frequent credit inquiries, and unresponsive negotiations after debit card freezes, indicating continuous pressure on compliance baselines.
Instability at the shareholder level adds to operational uncertainties. In October 2025, a 41.652 million share stake held by the eighth-largest domestic shareholder, Jiangxi Baoshen Industrial, failed to attract bidders even with a starting price at a 30% discount; this shareholder had already entered bankruptcy review in 2021. In November of the same year, a 44.613 million share stake held by the seventh-largest domestic shareholder, Junhe (Xiamen) Holding, was listed for auction. Its major shareholder, Shanghai Junhe Group, had already experienced a capital chain rupture crisis, with its actual controller out of contact and total enforcement amounts reaching 2.87 billion yuan.
Risks at the shareholder level have transmitted to the secondary market, causing continued pressure on BANK OF JIUJIANG's stock price. From a high of HKD 10.8 in November 2021, the price fell to HKD 1.75 by early 2026, a cumulative drop of 84% over more than four years. The total market capitalization shrank to HKD 4.98 billion, with the price-to-book ratio (P/B) falling to a rare 0.13 times. The 52-week decline reached 73.78%, reflecting investor confidence at a freezing point.
The predicament faced by BANK OF JIUJIANG is a microcosm of the challenges普遍ly encountered by small and medium-sized city commercial banks. In an environment of narrowing interest margins and profit pressures, most small and medium-sized banks lack sufficient internal capital generation capacity, making reliance on external channels for "blood replenishment" commonplace. However, even after capital replenishment, they still face multiple issues, including sluggish improvement in asset quality, a singular profit structure, and imperfect internal control mechanisms. Unlike the strategic capital injections led by the Ministry of Finance for large state-owned banks in 2025, BANK OF JIUJIANG's private placement is more of a passive, stopgap measure to counter risks, lacking a systematic plan for governance optimization and business transformation.
For BANK OF JIUJIANG, the private placement to "replenish blood" is only the first step. To truly escape its困境, the bank must confront the risks遗留ed from its past aggressive expansion, intensify efforts to dispose of non-performing assets, and strictly control new risk exposures. It also urgently needs to rebuild its internal control system, plug compliance loopholes, and重塑 market trust. Otherwise, even if the private placement is completed, capital may continue to be consumed by non-performing assets, leading to a vicious cycle.