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 income 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 income 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 income.

The income 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.

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 a slight 8.95% decline in reported net profit (RMB 866 million) but also more accurately reflected the upward trajectory of the bank's core business profitability 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 of 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 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 quality-enhancing liability-side efficiency."

The customer base continued to strengthen. During the reporting period, Lanzhou Bank held:

• 12.28% market share of deposits in Gansu Province (ranked second)
• 10.05% market share of loans in Gansu Province (ranked third)
• Over 7.3 million customers

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 Province. 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.

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 risk compliance bottom line." The bank is advancing the construction of a "four-dimensional bank" (industrial bank, community bank, digital bank, and stable bank) and fighting "six key battles": asset quality, industrial finance, community ecosystem, data technology, compliance governance, and talent organization.

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

Breakthroughs in the "Five Major Financial Articles": A "Lanzhou Sample"

If the revenue recovery is the "face" of the semi-annual report, then the substantive breakthroughs in the "five major financial articles" (technology finance, green finance, inclusive finance, pension finance, and digital finance) represent its "substance." In technology finance, Lanzhou Bank delivered a significant performance:

• Technology enterprise loan balance: RMB 18.551 billion, a net increase of RMB 1.88 billion or 11.28%

More notably, the bank made an innovative move in the bond market—issuing the first RMB 2 billion, 5-year technology innovation bond in Northwest China, empowering local technology 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 technology enterprises through capital market instruments, and exploring a replicable product paradigm for financial support of technology 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.

From a broader perspective, Lanzhou Bank's practices address an industry-wide question: How can city commercial banks find their differentiated positioning within the "five major financial articles"? The answer lies in "deep cultivation of the local market." Leveraging strong cooperative relationships with local governments, Lanzhou 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 technology 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, continuously promoting the expansion and quality improvement of three major customer groups: corporate, retail, and inclusive finance. As large banks leverage technological advantages to compete for customers, Lanzhou Bank chooses to counter "downward expansion" with "deep cultivation" and standardized products with local insight—this is the survival wisdom of local legal-person banks and the source of their 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 the backdrop of increased credit deployment, the NPL ratio declined rather than increased, 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 "stable bank" is not an empty slogan—the improvement in the capital adequacy ratio means that while serving the real economy, Lanzhou Bank has retained 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, which is related to the bank's proactive strategy of increasing write-offs to lighten its load. Given the actual reduction of RMB 54.46 million in NPL balance, the slight adjustment in provisions is more of an active financial management choice 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 foundation—the "1" upon which scale, profit, and innovation (the "0s") depend. Lanzhou Bank's improvement in both NPL ratio and capital adequacy ratio in the first half of the year has opened up space for subsequent battles in the second half, including the "industrial finance summit battle" and the "data technology foundation battle."

Cash flow from operating activities was RMB 8.563 billion, down 27.34% year-on-year but still maintaining a large net inflow. Cash flow from investing activities was RMB -9.072 billion, significantly narrowing from RMB -11.676 billion in the same period last year. This improvement in cash flow structure further confirms 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 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 across the banking industry, Lanzhou Bank has demonstrated a more resilient growth path with operating income of RMB 4.179 billion, adjusted net profit of RMB 960 million, and an NPL ratio of 1.78%. This path does not pursue bloated scale but rather solid quality and efficiency; it does not rely 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 layout.

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

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

(Source: National Business Daily)