Bank of Lanzhou H1 revenue up 6.6%, core net profit up 7.14% as funding costs fall

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 price through service 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 (NIMs), with city commercial banks bearing the brunt. Lanzhou Bank's chosen approach: rather than blindly competing on scale, it focused on extracting benefits from its pricing system.

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 freed up 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 signals an accelerating diversification of revenue streams—a more valuable long-term indicator than simple scale expansion in the context of city commercial bank transformation.

Even more noteworthy is the performance of net profit excluding non-recurring items: RMB 960 million, up 7.14% year-on-year. This growth rate not only reversed the apparent pressure of a slight 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.

• Weighted average return on equity (ROE): 2.83%, up 0.10 percentage points year-on-year
• Weighted average ROE excluding non-recurring items: 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 guidance of "actively adjusting scale indicators," this growth rate masks a deeper structural optimization:

• Loans and advances to customers: RMB 259.063 billion, up 1.59% from the beginning of the year
• Customer 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 liability-side quality and efficiency improvement."

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

• Deposit market share in Gansu Province: 12.28% (ranked 2nd province-wide)
• Loan market share in Gansu Province: 10.05% (ranked 3rd province-wide)
• Total customers: Over 7.3 million

As Gansu Province's first local legal-person joint-stock commercial bank, Lanzhou Bank operates:

• 1 head office banking department
• 15 branches
• 178 sub-branches
• A branch network covering all cities and prefectures in Gansu Province
• 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.

Strategic Framework: "Four-Dimensional Bank" and "Six Key Battles"

Strategically, Lanzhou Bank has clearly set the goal of "building a first-class city commercial bank in Western China," focusing on two core tasks: "precisely serving the real economy and strengthening the bottom line of risk and compliance." The bank is advancing the construction of a "Four-Dimensional Bank":

1. Industrial Bank
2. Community Bank
3. Digital Bank
4. Prudent Bank

It is also committed to winning "Six Key Battles":

1. Asset quality攻坚战 (assault)
2. Industrial finance summit campaign
3. Community ecosystem deep cultivation campaign
4. Data technology foundation-strengthening campaign
5. Compliance governance upgrade campaign
6. Talent organization empowerment campaign

Under this strategic blueprint, the "Industrial Bank" focus is particularly clear: Aligned with the requirements of the first year of the "15th Five-Year Plan," the bank has continuously increased credit support for new energy, technology-based enterprises, industrial manufacturing, and major provincial and municipal projects, shifting credit resources from "broadcasting seeds" to "precise drip irrigation."

Breakthroughs in Finance's "Five Major Articles": A "Lanzhou Sample"

If revenue recovery is the "face" of the semi-annual report, then substantive breakthroughs in finance's "Five Major Articles" constitute its "substance." In the area of technology finance, Lanzhou Bank delivered a significant result:

• Technology 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 foray into the bond market—issuing the first RMB 2 billion, 5-year technology innovation bond in Northwest China to empower local tech enterprises to move towards innovation. This strategic move breaks 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 phases of industries such as solar photovoltaics, energy storage, and smart grids. Against the backdrop of advancing "dual carbon" goals, this business line's deployment offers both policy alignment and commercial sustainability.

From a broader perspective, Lanzhou Bank's practice addresses an industry-wide question: How can city commercial banks find their differentiated positioning within finance's "Five Major Articles"? The answer lies in "deep cultivation of the local market." Leveraging strong cooperative relationships with local governments, the bank has deeply embedded itself in the entire chain of Gansu Province's industrial transformation and upgrading—from financing advisory for major provincial and municipal projects, to pioneering first-loan customers for tech enterprises, to financial support for the new energy industry chain—forming a business matrix that is "grounded, implementable, and sustainable."

This "deep cultivation" is also reflected in the granularity of customer management. During the reporting period, the bank persisted in deepening its local market presence and lowering its service center of gravity, continuously promoting the expansion and quality improvement of its corporate, retail, and inclusive finance customer segments, with steady increases in customer base coverage, stickiness, and comprehensive value. As large banks leverage technological advantages to move downmarket for customers, Lanzhou Bank chooses to counter "downward expansion" with "deep cultivation" and standardized products with local insight—this is the survival wisdom of a local legal-person bank and the source of its irreplaceability.

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

The high-quality development of the banking industry 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 construction of a "Prudent Bank" is not an empty slogan—the improvement in the capital adequacy ratio means that while serving the real economy, the bank has preserved a safety margin and regulatory flexibility for further expansion.

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

From an overall perspective, the "asset quality攻坚战" is placed first among the "Six Key Battles," and this is no coincidence. For an institution aiming to become a "first-class city commercial bank in Western China," asset quality is the foundational "1," while scale, profit, and innovation are the "0s" that follow. Lanzhou Bank's dual improvement in the two core indicators of NPL ratio and capital adequacy ratio in the first half of the year has opened up space for subsequent battles in the second half, such as the "industrial finance summit campaign" and the "data technology foundation-strengthening campaign."

Cash flow highlights:

• 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 (significantly narrowed from RMB -11.676 billion in the same period last year)

The improvement in cash flow structure provides another perspective confirming the enhancement of operational quality and efficiency.

Beyond the Semi-Annual Report: The Value of a Western Sample for "Quality and Efficiency Over Scale"

Returning to the starting point of this semi-annual report—"compensating for price through service 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 the banking industry faces widespread NIM pressure and the dividends of scale-driven growth are fading, Lanzhou Bank has demonstrated a more resilient growth path with operating revenue of RMB 4.179 billion, adjusted net profit of RMB 960 million, and an NPL ratio of 1.78%: pursuing not the bloatedness of scale, but the solidity of quality and efficiency; relying not on single-point breakthroughs, but on the coordinated advancement of the "Four-Dimensional Bank."

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 sample value far beyond its individual significance. 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 in depth, Lanzhou Bank's first-mover advantages in technology finance, green finance, and inclusive finance are expected to further translate into market share and profit momentum. For investors and observers, perhaps the biggest highlight of this semi-annual report is not the standout performance of any single data point, but the overall "strategic resolve" displayed by Lanzhou Bank—choosing to do difficult but correct things amidst noisy industry competition, and choosing to win the future with "quality and efficiency."

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

(Source: National Business Daily)