Analysis of H-share Shareholders' Opposition Incident and Core Capital Adequacy Ratio Risks of Chongqing Rural Commercial Bank

Based on the collected information, I will conduct a systematic analysis for you.

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On December 10, 2025, the general meeting of shareholders of Chongqing Rural Commercial Bank (03618.HK) witnessed a market-concerned scene: two core proposals to revise the articles of association and the rules of procedure of the board of directors encountered

and [1]. Although the two proposals were finally passed relying on the absolute controlling advantage of A-share shareholders, the sharp opposition between the A-share and H-share shareholder camps revealed deep-seated corporate governance conflicts[1].

The core clause of the dispute is the

. In the view of the management, this is a measure to improve decision-making efficiency; however, in the eyes of international institutional shareholders, it is a [1]. This dual tension between “market-oriented governance” and “administrative management” is a typical governance dilemma faced by current bank stocks.

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According to the latest financial data, the core tier 1 capital adequacy ratio of Chongqing Rural Commercial Bank shows a sustained downward trend[2][3]:

Time Node	Core Tier 1 Capital Adequacy Ratio	Capital Adequacy Ratio
End of June 2025	13.30%	-
End of September 2025	12.98%	14.77%

:

• The core tier 1 capital adequacy ratio decreased by 0.32 percentage points in
  one quarter
  , with a significant decline
• From a long-term trend, although the indicator remained relatively stable from 2016 to 2024, the decline in 2025 broke the previous balance[4]
• Against the background of stricter supervision, the pressure of capital supplementation continues to increase

The third quarterly report of 2025 shows[3]:

• Operating income in the first three quarters was 21.658 billion yuan, a year-on-year increase of only
  0.67%
• Operating income in the third quarter decreased by
  7.98%
  month-on-month, and net profit attributable to shareholders decreased by
  24.26%
  month-on-month
• The net interest margin was 1.59%, which was higher than the industry average but decreased by 2BP year-on-year
• Intermediary business income continued to weaken: net fee and commission income in the first three quarters decreased by
  16.71%
  year-on-year

The continuous weakening of profitability means that

, and the bank has to rely more on external financing channels.

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The 2023 Central Financial Work Conference clearly set the top-level tone that “the functionality of the financial industry is the first, and profitability is the second”[1]. Under this framework, commercial banks are anchored as strategic tools for “serving the real economy and maintaining financial security”.

:

• When shareholders request to increase the dividend ratio, the management refuses on the grounds that “profits need to be retained to support credit lending to the real economy”
• When shareholders propose to repurchase stocks that are trading below net asset value, the management refuses on the grounds that “capital must be used for risk buffering and business expansion”
• When shareholders submit temporary proposals, the management blocks them on the grounds that “they do not conform to the direction of national financial policies”[1]

This “functionality” is becoming a “liability shield” for the management, and the traditional rights of shareholders are at risk of being hollowed out.

Behind the frequent opposing votes of H-share shareholders, ESG factors are increasingly prominent[5]. Foreign institutions are dissatisfied with the content of ESG reports, believing that some indicators are not fully reflected.

, which leads to frequent high-proportion opposing votes in H-share class shareholders’ meetings.

The ESG-related questions faced by Chongqing Rural Commercial Bank include:

• Sufficiency of information disclosure during the withdrawal and merger process of rural banks
• Balance between capital use efficiency and shareholder returns
• Whether the governance structure conforms to international best practices

Judging from the strong opposition of H-share shareholders, the company may have insufficient communication with the market regarding

. When the core capital adequacy ratio continues to decline, investors have the right to know:

• Future capital supplementation plans and timetables
• Balance strategy between business expansion and capital constraints
• Specific measures for risk-weighted asset management

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The decline in core capital adequacy ratio will directly restrict the business development space of the bank:

• Growth of risk-weighted assets (RWA) is restricted
• Loan lending capacity is constrained by capital
• In the highly competitive Chongqing market, it may lose part of its market share

The decline in capital adequacy ratio will affect the bank’s credit rating, thereby increasing financing costs:

• The interest rate for issuing tier 2 capital bonds may rise
• Interbank financing costs may increase
• The advantage of deposit costs may be eroded

Currently, the H-shares of Chongqing Rural Commercial Bank have been trading below net asset value for a long time, and the decline in capital adequacy ratio will further intensify market concerns:

• International institutional investors may continue to reduce their holdings
• It will be more difficult to repair the valuation
• Refinancing capacity will be restricted

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The high-proportion opposing votes of H-share shareholders of Chongqing Rural Commercial Bank on the articles of association amendment incident are seemingly a dispute over governance clauses, but in essence, they reflect the market’s deep-seated concerns about the bank’s

. From the perspective of corporate governance analysis:

1. Short-term Risks
   : The core tier 1 capital adequacy ratio continues to decline (13.30%→12.98%), endogenous supplementation capacity weakens, and exogenous financing demand rises.

2. Medium-term Risks
   : Profitability pressure coupled with capital consumption, business expansion is restricted, and shareholder return expectations decline.

3. Long-term Risks
   : The gap between the governance structure and ESG requirements may affect the confidence of international institutional investors and restrict valuation repair.

:

• Strengthen active communication with H-share shareholders and transparently disclose capital supplementation plans
• Optimize the shareholder return mechanism under the premise of meeting regulatory requirements
• Improve ESG information disclosure to enhance the trust of international institutional investors
• Prudently evaluate the pace of business expansion to avoid excessive capital consumption

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[1] Sina Finance - Bank Shareholders Begin to “Say No” (https://finance.sina.com.cn/money/bank/bank_hydt/2025-12-15/doc-inhavsem4083997.shtml)

[2] NetEase Account - Fined 8.7 Million Yuan + 2 People Banned for Life, Chongqing Rural Commercial Bank Penalized (https://www.163.com/dy/article/KHLEDHVG05569L3G.html)

[3] Sina Finance - Balance Between “Stability” and “Progress”: Chongqing Rural Commercial Bank Seeks Progress While Maintaining Stability and Improves Quality and Efficiency in Deepening Reform (https://finance.sina.com.cn/stock/wbstock/2025-12-19/doc-inhcicem5860695.shtml)

[4] China Rural Finance - Trend Chart of Capital Adequacy Ratio of Chongqing Rural Commercial Bank (https://app-new.sxwbs.com/upload/news/image/2025/12/01/1764594481969054994.png)

[5] East Money - Opposing Votes Frequently Appear in H-share Class Shareholders’ Meetings, ESG Issues Become New Concerns for Dual-listed Companies (https://finance.eastmoney.com/a/202512253601121154.html)

[6] Guancha.cn - “Complete Liquidation”, Trillion-Yuan Rural Commercial Bank Chongqing Rural Commercial Bank Lists and Transfers 90% Equity of a Rural Bank (https://finance.sina.com.cn/roll/2025-12-22/doc-inhcsmfm6261037.shtml)

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