Recently, Guangzhou Rural Commercial Bank (GRCB) announced that its board of directors has approved a significant potential asset sale, intending to publicly list a batch of debt assets for transfer through the property rights trading center, with a preliminary minimum price of approximately 12.2 billion yuan.
The announcement indicates that the assets to be sold comprise the legally owned credit assets of GRCB, which include loans covering principal, interest, advanced legal fees, and penalties. As of June 30, 2025, the principal balance of this asset batch is approximately 14.98 billion yuan, with accrued interest totaling around 3.9 billion yuan, advanced judicial expenses of about 0.05 billion yuan, and penalties of about 0.002 billion yuan, bringing the total debt to approximately 18.93 billion yuan. After deducting factors such as on-balance receivable interest and asset impairment provisions, the unaudited book value is approximately 12.13 billion yuan, suggesting a slight premium of 68 million yuan over the initial minimum transfer price.
Industry distribution shows that the debt is concentrated in sectors such as leasing and business services, and real estate, with leasing and business services accounting for 38.78% (principal balance of 5.81 billion yuan), real estate for 20.5% (principal balance of 3.06 billion yuan), and wholesale and retail, as well as accommodation and catering, accounting for 16.27% and 9.81%, respectively. Other industries account for less than 10%. Financial data indicates that this asset batch has been continuously loss-making in recent years, with pre-tax net losses of approximately 510 million yuan and 1.06 billion yuan in 2023 and 2024, respectively, and post-tax net losses of approximately 380 million yuan and 800 million yuan.
Total debt transferred exceeds 48.1 billion over three years Looking back, GRCB's large-scale asset transfers began at the end of 2023 and have continued annually. By December 31, 2023, the bank completed its first transaction involving over 10 billion yuan in asset disposal, which included corporate loans and financial investment assets, amounting to a total debt of about 14.59 billion yuan. The principal loan balance reached 14.99 billion yuan, ultimately selling for a total consideration of 9.47 billion yuan, reflecting a principal discount rate of around 63%. This transaction adopted a decentralized acceptance model with 105 receivers, including Guangzhou Huaxin Group Co., Ltd., controlled by bank director Feng Yaoliang, which accepted assets worth 1.8 million yuan, while other independent third parties collectively took 9.44 billion yuan.
In 2024, GRCB's asset transfers took on a new direction. In November, the bank was the first to announce plans to transfer the second batch of over 10 billion yuan in assets, again totaling approximately 14.59 billion yuan, with a preliminary pricing of around 10 billion yuan. After a month of preparation, this transaction was formally completed on December 31, 2024, selling for 9.993 billion yuan to Guangzhou Asset Management Co., Ltd., with payment made in installments. This asset package exhibited a very high concentration in the industry, with 96.67% of the principal balance coming from real estate, involving 11.47 billion yuan in principal.
After the transfer, the bank's real estate loan balance saw a significant reduction of 21.6% compared to mid-2024, having disposed of 3.84 billion yuan in non-performing loans in one go. However, this high concentration brought cost pressures, resulting in a loss of around 350 million yuan from this transaction, highlighting the challenges of valuing non-performing real estate assets.
In terms of scale, GRCB's three asset transfers from 2023 to 2025 cumulatively covered a total debt of approximately 48.11 billion yuan, with an aggregate transfer consideration reaching 31.66 billion yuan. The first two completed transactions have brought in 19.46 billion yuan in cash, and with a successful transaction in 2025, an additional 12.2 billion yuan in operational funds will be obtained, providing significant support to the bank's liquidity reserves.
The impacts of these transfers show the gradual clearing of risks: during the first two transactions, particularly when transferring the housing asset package in 2024, 3.84 billion yuan in non-performing loans were directly addressed. The risk characteristics of the assets to be transferred in 2025 also stand out, as this asset package reported cumulative pre-tax net losses of 1.57 billion yuan in 2023 and 2024. If the transfer is completed successfully, it will further reduce the bank's non-performing loan ratio and alleviate subsequent provisions pressures.
The industry's risk exposure has shifted from high concentration in 2024 to a more diversified model. The asset package transferred in 2024 saw real estate loans account for as much as 96.67%, while the assets planned for transfer in 2025 will span multiple sectors, including leasing, business services, real estate, wholesale, and retail.
From a financial standpoint, the bank's asset disposal reflects a strategy of "short-term profit for long-term health." According to the disclosure, while the transfer of 14.59 billion yuan in debt in 2024 incurred approximately 350 million yuan in losses due to the discounted valuation of real estate assets, the pricing strategy for the assets to be transferred in 2025 appears more stable, with an initial base price of 12.2 billion yuan showing a premium of 70 million yuan over the unaudited book value of 12.13 billion yuan, indicating enhanced asset valuation capabilities. In terms of cash recovery, the first two transactions have already generated 19.46 billion yuan in cash for the bank, and if the 2025 transaction goes smoothly, the cumulative cash recovery will exceed 31.6 billion yuan. This capital can be used to supplement core Tier 1 capital or to expand quality lending businesses, thus improving the bank's profit structure, which has been highly reliant on interest spreads.
Falling Behind in the Industry From core financial data and regulatory indicators, GRCB has seen modest asset growth in recent years, but its profitability remains under pressure.
Looking at profitability, the bank's profit indicators have shown a declining trend over the years, placing it at the bottom tier within the industry.
Profit and loss statements reveal that its operating income has decreased consistently from 21.22 billion yuan in 2020 to 8.04 billion yuan by the mid-2025 interim report, with a year-on-year decline of 12.8% in 2024. Net profit has similarly dropped from 5.08 billion yuan in 2020 to 1.37 billion yuan in the mid-2025 report, with a year-on-year decline of 25.9%. During the first half of 2025, net profit remains in a downward trend, dropping by 11.2% year-on-year. Meanwhile, its profitability indicators have also worsened, with net interest margins declining from 2.01% in 2020 to 1.03% in the mid-2025 report, and the return on interest-earning assets falling from 4.23% to 2.78%, while total asset return on assets (ROA) dropped from 0.55% in 2020 to 0.11% in the mid-2025 report, placing these indicators at a low level compared to the industry.
In terms of asset size and business structure, the bank exhibits a contradiction of expanding total assets but weak loan growth. Its balance sheet shows that total assets increased from 1.03 trillion yuan in 2020 to 1.41 trillion yuan by the mid-2025 report, indicating steady expansion. However, the total loan amount has seen a decline for the first time in nearly a decade: by the end of 2024, total loans amounted to 720.23 billion yuan, a year-on-year decrease of 1.5%, resulting in Shanghai Rural Commercial Bank surpassing it. By mid-2025, the total loan amount further dropped to 717.34 billion yuan, a decrease of 289 million yuan compared to the end of 2024.
In contrast to the weak loan business, the financial investment sector is experiencing rapid growth, with GRCB's financial investments reaching 479.95 billion yuan by mid-2025, up 13.8% year-on-year, accounting for 34.1% of total assets. This growth rate and share are leading among the four major rural commercial banks with over one trillion in assets.
Historically, the bank's total loans have accounted for over 50% of total assets since 2019, the highest among its peers. Now, the large expansion of financial investment indicates an active adjustment in business structure, reflecting the challenges faced in loan growth.
In a comparative industry context, GRCB's profitability also ranks at the bottom. By mid-2025, there are four rural commercial banks with total assets exceeding one trillion yuan—Chongqing Rural Commercial Bank, Shanghai Rural Commercial Bank, GRCB, and Beijing Rural Commercial Bank. GRCB ranks third in total asset size, but its profitability lags behind the other three, achieving a net profit of only 1.37 billion yuan, significantly lower than Chongqing Rural Commercial Bank's 7.85 billion yuan, Shanghai Rural Commercial Bank's 7.17 billion yuan, and Beijing Rural Commercial Bank's 4.24 billion yuan. Additionally, it is the only one among the four banking institutions reporting a year-on-year decline in net profit, indicating it is at the bottom in terms of both profit scale and growth.
Asset Transfer as a Lifeline for Risk Clearance For GRCB, asset transfers have become critical for current risk clearance, and the pressure on the bank regarding asset quality and risk resistance has highlighted the increasing importance of this disposal method.
In terms of regulatory indicators, the non-performing loan ratio has risen from 1.66% at the end of 2024 to 1.98% in the mid-2025 report, and the provision coverage ratio has decreased from 184.34% to 169.75%, while the loan provision ratio has increased from 3.06% to 3.36%. Although the current provision coverage ratio remains above the industry average, the rise in the non-performing ratio coupled with shrinking loan volumes objectively reflects the pressure the bank is facing in controlling the quality of credit assets.
Further examining asset quality details, the bank's overdue loans have significantly risen, reaching 51.09 billion yuan by the end of June, an increase of 19.02 billion yuan compared to the end of the previous year, with the overdue loan ratio rising from 4.45% to 7.12%. Alarmingly, the degree of non-performing loan deviation, measured as the ratio of loans overdue for more than 90 days to non-performing loans, stood at approximately 115.3% by June 2025, as overdue loans exceeding three months totaling about 16.4 billion yuan contrasted with the book total of non-performing loans at only 14.22 billion yuan, exceeding the regulatory warning line of 100%.
According to regulatory classifications for asset quality, all loans overdue for over 90 days must be classified as non-performing. However, GRCB has over 2.18 billion yuan in loans overdue for over 90 days still categorized as "normal" or "watch," circumventing the classification of non-performing loans.
This practice essentially delays the recognition of non-performing loans, artificially suppressing non-performing ratios to present a healthier asset quality report; however, many loans overdue beyond 90 days already carry a high default risk. If they deteriorate en masse, the bank's non-performing ratio could see a significant spike, impacting core indicators such as provision coverage and capital adequacy ratios, with actual risks substantially underestimated.
Moreover, the continuous expansion of the ratio of loans under watch is noteworthy, rising from 6.45% at the end of 2024 to 6.87% in the mid-2025 report, indicating that potential risks are accumulating, with significant pressure on future loans to transition to non-performing status.
By industry, some sectors have shown increasing non-performing rate trends. For instance, the agriculture, forestry, animal husbandry, and fishery sector saw its non-performing rate rise from 7.85% at the end of 2024 to 9.56% in the mid-2025 report. The wholesale and retail sectors also saw an increase in non-performing rates from 4.10% at the end of 2024 to 4.48%, necessitating vigilance over the deteriorating asset quality in these industries.
However, the changes in the real estate sector's non-performing rates are particularly striking. By the end of 2023, the bank's real estate sector's non-performing rate was as high as 5.94%, dropping sharply to 1.45% by the end of 2024, maintaining at 1.50% in the mid-2025 report, showing a significant downward trend. This effect is directly attributed to the batch transfer of real estate asset packages in December 2024, where real estate principal accounted for 96.67% of the assets, resulting in a large volume of non-performing assets being disposed of in one go, significantly contributing to the rapid decline of the industry's non-performing rate and validating the effectiveness of asset transfers in clearing specific industry risks.
In this context, the new round of asset transfers planned for October 2025 is immensely significant. The asset package to be transferred emphasizes coverage of the leasing and business services, wholesale, and retail sectors—wherein wholesale and retail represents the largest share of the bank's corporate loans (34.69% as of June 2025). The non-performing loan rate in this sector has risen to 4.48%, indicating a high level. Loans in the leasing and business services sector also constitute 14.49% of the total lending, although their non-performing rate is relatively low at 0.87%. Successfully executing this transaction would further help in disposing of assets in these high-risk industries, reducing the non-performing loan ratio, alleviating provisioning pressures, and optimizing risk exposure, laying a solid foundation for long-term asset quality stability.