Bank of Lanzhou H1 revenue up 6.6%, adjusted net profit up 7.14%, NPL ratio falls to 1.78%

August 28 – Lanzhou Bank (001227.SZ) released its semi-annual report for the first half of 2026 on the evening of August 28. As of the end of the reporting period, the bank's total assets reached RMB 533.102 billion, an increase of 0.58% from the beginning of the year. In the first half of 2026, the bank achieved operating revenue of RMB 4.179 billion, up 6.60% year-on-year, and net profit attributable to shareholders of the parent company (excluding non-recurring gains and losses) of RMB 960 million, up 7.14% year-on-year.

In the first year of the "15th Five-Year Plan" period, Gansu Province's first A-share listed bank delivered a performance report card characterized by "revenue growth turning from negative to positive, double-digit growth in adjusted net profit, and stable asset quality," clearly demonstrating the practical results of its operational strategy of "compensating for pricing through services and compensating for scale through quality and efficiency."

Revenue Growth Turns Positive: 6.60% Driven by a "Precision Surgery" on Pricing

Operating revenue of RMB 4.179 billion, an increase of RMB 259 million or 6.60% year-on-year, represents more than just a return to positive growth. In recent times, commercial banks have generally faced pressure from narrowing net interest margins, with city commercial banks particularly affected. Lanzhou Bank's response has been to focus on pricing system efficiency rather than blindly pursuing scale.

During the reporting period, the bank fully implemented a refined interest rate pricing system and continued to deepen cost reduction and efficiency improvement on the liability side. Results were directly reflected in deposit interest rates:

• Corporate deposit interest rate: 1.16%, down 19 basis points from the beginning of the year
• Personal deposit interest rate: 2.09%, down 40 basis points from the beginning of the year

The "dual decline" in liability costs created room for the asset side to support the real economy and formed the core foundation for the recovery in operating revenue.

The revenue structure also merits attention. In the first half of the year:

• Net interest income: RMB 3.2 billion, up 5.7% year-on-year
• Non-interest net income: RMB 979 million, up 9.8% year-on-year

The faster growth in non-interest income indicates accelerating income diversification—a signal of greater long-term value than simple scale expansion in the context of city commercial bank transformation.

More notably, net profit attributable to shareholders (excluding non-recurring items) reached RMB 960 million, up 7.14% year-on-year. This growth rate not only reversed the apparent pressure of an 8.95% decline in reported net profit attributable to shareholders (RMB 866 million) but also more accurately reflects that the bank's core business profitability has entered an upward trajectory driven by pricing optimization. The weighted average return on equity (ROE) was 2.83%, up 0.10 percentage points year-on-year; the weighted average ROE excluding non-recurring items was 3.13%, up 0.58 percentage points year-on-year. The improvement in real shareholder returns serves as the most convincing post-operative report from this "precision surgery."

RMB 533.1 Billion in Assets: Steady Growth with Quality Improvement

As of June 30, 2026, Lanzhou Bank's total assets stood at RMB 533.102 billion, an increase of RMB 3.086 billion or 0.58% from the beginning of the year. Under the strategic direction of "actively adjusting scale indicators," this growth rate masks significant structural optimization:

• Loans and advances: RMB 259.063 billion, up 1.59% from the beginning of the year
• Deposits: RMB 374.834 billion, down 0.38% from the beginning of the year

Loan growth significantly outpaced asset growth, while deposit scale saw a slight adjustment, clearly outlining a profile of "precise asset-side deployment and quality-and-efficiency improvement on the liability side."

The customer base continued to strengthen. During the reporting period:

• Deposit market share in Gansu Province: 12.28% (ranked second)
• Loan market share in Gansu Province: 10.05% (ranked third)
• Total customers: Over 7.3 million

As Gansu Province's first local legal-person joint-stock commercial bank, Lanzhou Bank operates one head office business department, 15 branches, and 178 sub-branches, with outlets covering all cities and prefectures in Gansu. It also holds a controlling stake in Gansu Lanyin Financial Leasing Co., Ltd. This physical network, combined with the trust of 7.3 million customers, forms a unique moat for its deep cultivation of the local market.

"Five Major Articles" of Finance: Breakthroughs in Sci-Tech Finance

If revenue recovery is the "face" of the semi-annual report, then substantive breakthroughs in the "five major articles" of finance constitute its "substance." In the field of sci-tech finance, Lanzhou Bank delivered a significant performance:

• Sci-tech enterprise loan balance: RMB 18.551 billion, a net increase of RMB 1.880 billion or 11.28%

More notably, the bank made an innovative move in the bond market—issuing the first 20 billion yuan, 5-year sci-tech innovation bond in Northwest China, empowering local tech enterprises to move towards innovation. The strategic significance lies in breaking through the single model of traditional credit support, providing medium-to-long-term, low-cost funding sources for tech enterprises through capital market instruments, and exploring a replicable product paradigm for financial support of technological innovation in the Northwest region.

In green finance, Lanzhou Bank has supported a number of new energy projects with strong qualifications and good credit standing, focusing on the production, construction, and operation of solar photovoltaic, energy storage, and smart grid industries. Against the backdrop of advancing "dual carbon" goals, this business line aligns well with both policy direction and commercial sustainability.

Asset Quality: NPL Ratio at 1.78%, Provision Coverage at 191.69%

High-quality development in banking ultimately depends on asset quality. As of the end of the reporting period:

• Non-performing loan (NPL) ratio: 1.78%, down 0.04 percentage points from the beginning of the year
• NPL balance: RMB 4.733 billion, down RMB 54.46 million from the end of the previous year
• Provision coverage ratio: 191.69%

Against a backdrop of increased credit deployment, the NPL ratio declined rather than rose, confirming the practical effectiveness of the "asset quality攻坚战."

Capital position performance was also stable:

• Capital adequacy ratio: 12.28%, up 0.66 percentage points from the end of the previous year

The improvement in the capital adequacy ratio means the bank retains a safety margin and regulatory flexibility for further expansion while serving the real economy.

It should be noted that the provision coverage ratio of 191.69% decreased by 6.69 percentage points from the end of the previous year, related to the bank's proactive strategy of increasing write-offs to lighten its load. Given the actual reduction in NPL balance of RMB 54.46 million, this adjustment is more of an active financial management choice rather than a signal of asset quality deterioration.

Cash Flow and Outlook

• Net cash flow from operating activities: RMB 8.563 billion (down 27.34% year-on-year, but still maintaining a large net inflow)
• Net cash flow from investing activities: RMB -9.072 billion (narrowing significantly from RMB -11.676 billion in the same period last year)

The improvement in cash flow structure further confirms the enhancement of operational quality and efficiency.

Conclusion: A Western Model of "Quality and Efficiency Over Scale"

Returning to the starting point of this semi-annual report—"compensating for pricing through services and compensating for scale through quality and efficiency"—these eight words represent Lanzhou Bank's redefinition of the development paradigm for city commercial banks. At a time when net interest margins are under pressure and scale-driven dividends are fading, Lanzhou Bank has demonstrated a more resilient growth path with RMB 4.179 billion in operating revenue, RMB 960 million in adjusted net profit, and a 1.78% NPL ratio.

As Gansu Province's first A-share listed bank and an important pillar of the Northwest financial landscape, Lanzhou Bank's semi-annual report carries significance beyond the individual institution. It sends a clear signal to the market: in the first year of the "15th Five-Year Plan," local legal-person banks are fully capable of achieving high-quality development while serving the real economy through refined pricing, deep customer cultivation, and differentiated business deployment.

In the second half of the year, as the "six key battles" advance, Lanzhou Bank's first-mover advantages in sci-tech finance, green finance, and inclusive finance are expected to further translate into market share and profit momentum. For investors and observers, the biggest takeaway from this semi-annual report may not be any single data point, but rather the overall "strategic resolve" demonstrated by Lanzhou Bank—choosing to do difficult but correct things, and choosing to win the future through "quality and efficiency."

This is the hallmark of a "first-class city commercial bank in Western China."

(Source: National Business Daily)