Bank of Ningbo(SZ:002142) Sou Hu Cai Jing·2025-11-09 14:50Core Viewpoint - Ningbo Bank, once a leader among city commercial banks, faces significant challenges due to the prolonged tenure of Chairman Lu Huayu, which has led to governance issues and raised concerns about the bank's future development [1][3]. Governance Issues - Lu Huayu has served as Chairman for over 20 years, exceeding regulatory limits on tenure for key positions, which is set at a maximum of 6 years [3][4]. - The board structure has become imbalanced, with a majority of external directors having potential conflicts of interest, and independent directors serving beyond the allowed tenure, leading to a lack of necessary oversight [4]. Financial Performance - Despite maintaining double-digit growth in revenue and net profit in the first three quarters of 2025, this growth is attributed to scale expansion and low base effects rather than improvements in business quality [4]. - Non-interest income growth is weak, with a mere 1.34% increase year-on-year in the first half of 2025, indicating a reliance on asset scale expansion to sustain revenue growth [4]. Risk Management - The rapid expansion of asset scale has led to significant risk exposure, particularly with 68% of new loans concentrated in the Yangtze River Delta region, and a high non-performing loan rate among small and micro enterprises [5]. - The bank has employed aggressive write-off strategies to mask the true level of risk, with 86.09 billion yuan in bad loans written off in the first three quarters of 2025, representing 38.36% of net profit [5]. Compliance and Regulatory Issues - Ningbo Bank has faced frequent regulatory penalties for various compliance failures, indicating a breakdown in internal controls and governance structures [6]. - The bank's compliance spending as a percentage of revenue is higher than its peers, yet compliance risks continue to be prevalent, reflecting inefficiencies in its compliance management system [7]. Future Outlook - As Ningbo Bank approaches its 30th anniversary, it must address governance stagnation and risk accumulation to avoid potential stagnation and risk crises [7]. - Without restructuring its governance and establishing effective risk management mechanisms, the bank's seemingly strong financial data may not be sustainable in the face of underlying risks [7].