Key takeawayHuaxia Bank’s risk indicators improved while provisioning increased, and the decline in net interest margin narrowed significantly; on this basis, Minsheng Securities is watching for an earnings recovery after risk resolution, although increased provisioning still translates into higher current-period credit impairment losses.
Risk indicators improve, so why is provisioning still increasing?
- As of the end of the third quarter of 2026, Huaxia Bank’s non-performing loan ratio was 1.50%, down 5 basis points from the start of the year and unchanged from the end of the first half; its special-mention loan ratio was 2.60%, down approximately 4 basis points from the end of the first half. Both indicators were lower than at the start of the year, showing that legacy risks continued to be resolved.
- Credit impairment losses for the first three quarters of 2026 amounted to 33.963 billion yuan, up 86.64% year over year; at the end of the third quarter, the provision coverage ratio was 144.21%, up 0.91 percentage points from the start of the year. The report views higher impairment charges as part of resolving legacy risks and building a safety buffer for a subsequent earnings recovery.
The decline in net interest margin narrows: what is underpinning stability?
- Huaxia Bank’s net interest margin for the first three quarters of 2026 was 1.58%, down just 1 basis point from the first half, with the decline slowing markedly. The report identifies the continued release of cost benefits on the liability side as a supporting factor: the cost rate on interest-bearing liabilities fell to 1.49%, laying a solid foundation for stabilizing the net interest margin.
Can growth in scale support the operating base?
- As of the end of the third quarter of 2026, Huaxia Bank’s deposits and loans grew year over year by 10.61% and 12.28%, respectively; the report says its deposit and loan growth rates remained among the leaders among joint-stock banks. Double-digit growth forms part of the operating foundation and, together with risk resolution and an improved net interest margin, provides the basis for Minsheng Securities’ focus on a subsequent earnings recovery.
