The highly anticipated 2025 dividend proposal from BANK OF GANSU (HKG: 02139) has now been officially confirmed.

On the evening of June 30, BANK OF GANSU announced that its 2025 Annual General Meeting was held at its headquarters at 9 a.m. that day. All resolutions reviewed at the meeting were passed, with the most closely watched 2025 profit distribution plan receiving unanimous support from shareholders.

According to the voting results, the resolution to approve the 2025 profit distribution plan received 12,925,862,187 votes in favor, with zero votes against and zero abstentions, achieving unanimous approval.

Unanimous Approval for Payout

This outcome is not surprising. For shareholders, a cash dividend represents tangible investment returns, and few would vote against a distribution plan that does not clearly harm their own interests.

According to the announcement, BANK OF GANSU will pay a final cash dividend for the 2025 financial year on August 28, 2026. The dividend is set at RMB 1.18 per 10 shares (tax inclusive), is denominated in Renminbi, and will be paid to shareholders registered on the share register on July 20, 2026.

In fact, this dividend plan first attracted widespread market attention when the 2025 financial results were disclosed at the end of March this year.

At that time, BANK OF GANSU's board of directors proposed a final dividend of RMB 1.18 per 10 shares, amounting to a total distribution of approximately RMB 1.778 billion.

Payout Size vs. Profitability

The reason for the heated discussion lies in the stark contrast between the size of the dividend and the bank's profit level.

The annual report shows that in 2025, BANK OF GANSU achieved operating income of RMB 5.421 billion, a year-on-year decrease of 8.96%, marking the second consecutive year of decline. Full-year profit was RMB 591 million, a slight increase of 1.06% year-on-year. Net profit attributable to the bank's shareholders was approximately RMB 588 million, an increase of about 1.00%.

Based on this calculation, the proposed dividend amount of RMB 1.778 billion is approximately three times the net profit attributable to shareholders for the year, far exceeding the current profit level.

This indicates that this cash dividend does not primarily rely on the 2025 operating profit, but rather on the accumulated undistributed profits from previous years.

As of the end of 2025, the retained earnings of BANK OF GANSU on a consolidated basis were RMB 5.221 billion. Total equity attributable to the bank's owners was RMB 34.328 billion.

This RMB 1.778 billion distribution accounts for approximately 34.05% of the retained earnings and about 5.18% of shareholders' equity, indicating that the company possesses a certain accumulation of historical profits, providing a foundation for this substantial cash dividend.

Operating Performance Context

However, the backdrop against which this dividend exceeding current profits is occurring is not without challenges.

In 2025, while BANK OF GANSU's profit maintained slight growth, the revenue side continued to face pressure. Annual operating income fell 8.96% year-on-year to RMB 5.421 billion, with net interest income at RMB 4.413 billion, down 4.81% year-on-year. The net interest margin decreased from 1.18% in 2024 to 1.09%, marking the second consecutive year of decline.

Meanwhile, operating efficiency also came under pressure. In 2025, the bank's cost-to-income ratio rose to 41.60% from 38.20% the previous year, meaning the operating cost per unit of income increased.

In terms of asset quality, as of the end of 2025, BANK OF GANSU's non-performing loan balance was RMB 4.323 billion, with the non-performing loan ratio stable at 1.93%, unchanged from the end of 2024, indicating overall stable risk levels. However, the provision coverage ratio decreased by 3.22 percentage points to 130.83% from 134.05% at the end of the previous year.

Regarding capital adequacy levels, as of the end of 2025, BANK OF GANSU's core tier 1 capital adequacy ratio was 11.07%, while the tier 1 capital adequacy ratio and total capital adequacy ratio were both 12.07%, with all metrics meeting regulatory requirements.

Historical Dividend Record

Public information shows that BANK OF GANSU was officially established and commenced operations in November 2011. It successfully listed on the main board of the Hong Kong Stock Exchange on January 18, 2018, becoming the first listed city commercial bank in Northwest China.

After its listing, the bank paid a dividend once in September 2019, which was the final cash dividend for 2018, totaling RMB 1.029 billion. Since then, it had not paid any dividends until announcing this distribution plan this year, seven years later.

Market Implications and Outlook

Overall, the unanimous approval of this generous dividend plan by BANK OF GANSU signifies full shareholder endorsement of the board's profit distribution arrangement.

For the market, however, beyond the dividend itself, greater attention may lie in whether this distribution model, which significantly outpaces current profit levels, is sustainable in the future. This is particularly relevant against a backdrop of continued net interest margin compression, consecutive revenue declines, and limited profit growth for the bank. The ability of subsequent profit recovery to support similar shareholder returns also remains to be seen.