Two Hong Kong-listed banks in Guangdong—Guangzhou Rural Commercial Bank (01551.HK) and Dongguan Rural Commercial Bank (9889.HK)—recently disclosed their 2025 performance reports. According to the announcements, Guangzhou Rural Commercial Bank recorded operating revenue of 153.90 billion yuan in 2025, a decline of 2.79% year-on-year. However, its net profit attributable to shareholders increased by 1.98% to 2.122 billion yuan, halting a two-year downward trend and indicating a recovery in performance. In contrast, Dongguan Rural Commercial Bank reported operating revenue of 116.97 billion yuan and net profit attributable to shareholders of 3.854 billion yuan, reflecting decreases of 5% and 16.67% year-on-year, respectively. This marks the third consecutive year of declining profits for the bank.

Guangzhou Rural Commercial Bank and Dongguan Rural Commercial Bank are the only two listed local corporate banks in Guangdong. Guangzhou Rural Commercial Bank was listed on the main board of the Hong Kong Stock Exchange in June 2017, becoming the first local banking institution in Guangdong to go public. In 2021, Dongguan Rural Commercial Bank successfully listed in Hong Kong, making it the fourth rural commercial bank to be listed on the Hong Kong Stock Exchange.

Influenced by the macroeconomic environment, persistently low market interest rates, and policy-driven efforts to encourage financial institutions to support the real economy, both listed banks have faced sustained pressure on their performance in recent years. Key indicators such as operating revenue and net profit have nearly reverted to pre-listing levels.

Despite ongoing expansion in asset size, the two banks have shown divergent trends in operational efficiency. As of the end of 2025, Guangzhou Rural Commercial Bank's total assets reached 13.80008 trillion yuan, an increase of 17.601 billion yuan from the beginning of the year, representing a growth rate of 1.29%, though this pace has slowed compared to the previous year. Dongguan Rural Commercial Bank reported total assets of 7.96016 trillion yuan, up 50.112 billion yuan year-on-year, with a growth rate of 6.72%, indicating steady expansion.

In 2025, Guangzhou Rural Commercial Bank achieved operating revenue of 153.90 billion yuan, down 2.79% year-on-year. Its net profit stood at 2.464 billion yuan, while net profit attributable to shareholders was 2.122 billion yuan, showing modest growth of 2% and 1.98%, respectively. Compared to the significant declines of 12.79%, 25.89%, and 21.02% in operating revenue, net profit, and net profit attributable to shareholders in 2024, the bank's performance has shown signs of stabilization. A key factor behind this improvement is the reduction in credit impairment provisions, with credit impairment losses decreasing by 493 million yuan, or 6.35%, year-on-year in 2025.

Dongguan Rural Commercial Bank, however, faced more pronounced operational challenges. In 2025, its operating revenue fell by 5% to 116.97 billion yuan, while net profit dropped by 20% to 3.877 billion yuan. Net profit attributable to shareholders declined by 16.67% to 3.853 billion yuan, marking the third consecutive year of decreasing profits.

When viewed over a longer period, the performance of both banks has nearly reverted to pre-listing levels. Pressure on revenue is primarily attributed to declines in net interest income. Guangzhou Rural Commercial Bank reported net interest income of 136.89 billion yuan in 2025, a slight increase of 0.54% year-on-year, indicating relative stability. However, its net interest margin further declined to 1.08%, down 3 basis points from 1.11% the previous year, continuing a downward trend.

In comparison, Dongguan Rural Commercial Bank faced more direct pressure, with net interest income falling by 3.78% to 88.27 billion yuan and its net interest margin dropping to 1.25%, a decrease of 0.10 percentage points year-on-year. Data from the National Financial Regulatory Administration show that the average net interest margin for commercial banks was 1.42% at the end of the fourth quarter of 2025, indicating that both banks' margins are below the industry average, posing long-term challenges to profitability.

Beyond interest income, non-interest income has also been impacted by market volatility. Increased fluctuations in the bond market in 2025 have particularly affected small and medium-sized banks that heavily rely on bond investments. Guangzhou Rural Commercial Bank experienced significant changes in its non-interest income structure. The bank's net fee and commission income reached 684.20 billion yuan, a growth of 21.84% year-on-year, reflecting some success in expanding low-capital businesses. However, due to market volatility, the bank's net trading income shifted from a positive return the previous year to a loss of approximately 730 million yuan, significantly dragging down overall non-interest income.

Dongguan Rural Commercial Bank also faced pressure on non-interest income, with non-interest net income declining by 268 million yuan to 28.69 billion yuan, a decrease of 8.55% year-on-year. This was mainly due to adjustments in wealth management product fees and reduced net trading income caused by volatility in bond interest rates.

Against this backdrop, the profitability of the two banks has further diverged. Guangzhou Rural Commercial Bank has shown signs of recovery from a low base. In 2025, its net profit increased by approximately 2% year-on-year, with the average return on assets (ROA) remaining at 0.18% and the average return on equity (ROE) rising to 2.37%. Although overall profitability remains low relative to the industry, marginal improvements are emerging.

In contrast, Dongguan Rural Commercial Bank's net profit fell by 20.24% year-on-year in 2025, with ROA dropping to 0.50% and ROE declining to 6.18%, both showing significant decreases compared to the previous year.

Corporate banking remains a cornerstone of performance for both rural commercial banks. As of the end of 2025, Guangzhou Rural Commercial Bank's corporate loan portfolio stood at 5.18031 trillion yuan, accounting for 73.37% of its total loans. While maintaining its dominance in corporate banking, the bank has increased support for small and micro enterprises, technology finance, and green finance. In recent years, Guangzhou Rural Commercial Bank has promoted the development of a "3+2" specialized operational strategy to optimize its asset and liability structure and enhance competitiveness in small and medium-sized asset businesses. By the end of 2025, the balance of small and medium-sized corporate loans under 50 million yuan reached 68.22 billion yuan, accounting for 16.3% of corporate loans. The number of small and medium-sized corporate loan clients increased by 1,091 from the beginning of the year to 3,618.

Dongguan Rural Commercial Bank has emphasized its commitment to supporting agriculture, small businesses, and the real economy, aiming to synergize its four core business segments: corporate, retail, inclusive finance, and financial asset management. However, in terms of loan allocation, corporate loans amounted to 2.46554 trillion yuan, representing 60.28% of total loans, up 1.35 percentage points from 58.93% the previous year. The bank's lending is highly concentrated in the local real economy, with approximately 84.25% of loans distributed within the Dongguan region, primarily to manufacturing clients.

Regarding asset quality, both banks stated in their performance reports that they have intensified efforts in risk resolution and non-performing loan disposal amid a complex and volatile external environment. As of the end of 2025, Guangzhou Rural Commercial Bank's non-performing loan balance was 13.098 billion yuan, an increase of 1.148 billion yuan from the previous year. Its non-performing loan ratio rose by 0.2 percentage points to 1.86%. Non-performing loans were mainly concentrated in the wholesale and retail sectors (38.6%) and manufacturing (19.4%), while non-performing loans in the real estate sector accounted for only 7.9%.

Dongguan Rural Commercial Bank, on the other hand, showed a mixed trend in non-performing loan indicators. Its non-performing loan balance increased by 316 million yuan to 7.292 billion yuan, but the non-performing loan ratio declined to 1.79%, marking the first decrease after four consecutive years of increases. Non-performing loans were primarily concentrated in manufacturing and the leasing and business services sectors, together accounting for over 30% of the total. The bank's provision coverage ratio stood at 207.68%, the lowest level in nearly six years.

Divergence is also evident in the secondary market performance of the two banks. According to Wind data, Guangzhou Rural Commercial Bank's stock price fluctuated between HKD 1.36 and HKD 1.91 in 2025, with a full-year turnover of only HKD 8.7665 million and an average daily turnover of approximately HKD 35,000. Trading volume was zero on multiple trading days, reflecting low market attention. In contrast, Dongguan Rural Commercial Bank exhibited significantly higher trading activity, with its stock price ranging between HKD 3.16 and HKD 4.39 in 2025. Its full-year turnover reached HKD 398 million, 45 times that of Guangzhou Rural Commercial Bank, with an average daily turnover of about HKD 1.59 million.

As of the close on April 1, Guangzhou Rural Commercial Bank's share price was HKD 1.54, while Dongguan Rural Commercial Bank's was HKD 3.46. Both stocks have declined significantly from their historical peaks, with drops of 78.90% and 58.81%, respectively. Their latest total market capitalizations were HKD 22.191 billion and HKD 23.834 billion.