Analysis of Hangzhou Bank's Provision Coverage Ratio: Balancing Risk Management and Capital Efficiency Behind the 520% Figure

Based on the collected data, I first need to clarify an important point:

. The 203% figure you mentioned may be historical data or subject to information bias. Below is a detailed analysis based on actual data:

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Time Point	Provision Coverage Ratio	Non-Performing Loan (NPL) Ratio	Data Source
End of 2024	541.45%	0.76%	Annual Report [0]
End of June 2025	520.89%	0.76%	China Chengxin Rating Report [1]
Q3 2025	Approx. 513%	0.76%	Jiemian News Statistics [2]

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According to the Notice on Adjusting Regulatory Requirements for Commercial Banks’ Loan Loss Provisions [3] issued by the former China Banking Regulatory Commission (CBRC):

• Regulatory range for provision coverage ratio
  : 120% - 150%
• Regulatory range for loan loss reserve ratio
  : 1.5% - 2.5%

Indicator	Regulatory Floor	Regulatory Ceiling	Hangzhou Bank’s Actual Figure	Multiples Exceeding Ceiling
Provision Coverage Ratio	120%	150%	520.89%	3.5x the ceiling
Loan Loss Reserve Ratio	1.5%	2.5%	Approx. 3.8%	1.5x the ceiling

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Bank Type	Provision Coverage Ratio	Industry Ranking
Hangzhou Bank	513%	2nd Place (1st among city commercial banks)
Chengdu Bank	433%	3rd Place
Changshu Bank	462%	Top Tier
Ningbo Bank	350%	High Level
Agricultural Bank of China (Large State-Owned Bank)	295%	1st Among Large State-Owned Banks
Average of Joint-Stock Banks	180%	Medium Level
Overall Average of Commercial Banks	208.13%	Q1 Data

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2020: 317% → 2021: 426% → 2022: 565% → 2025: 520%

Hangzhou Bank’s provision coverage ratio reached a peak of 565% in 2022, after which it showed a slight downward trend but still remained at a high level of over 500% [1].

• In 2024, the bank accrued
  RMB 3.831 billion
  in loan loss provisions, a year-on-year increase of 11.74% [0]
• Net increase in the current period was
  RMB 8.287 billion
  , with write-offs and disposals amounting to
  RMB 5.456 billion
  [0]

• The NPL ratio has remained at 0.76% for 10 consecutive quarters
  [4]
• The proportion of special-mention loans is only 0.51%, placing the bank in the industry’s top tier for asset quality [1]

• Loans are mainly directed to economically developed regions such as Zhejiang, Nanjing, and Shanghai [1]
• Real estate-related loans account for 18.60% of total loans, but the NPL ratio of 6.44% is manageable [1]

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Aspect	Impact Analysis
Profit Release	High provisions mean greater room for profit release in the future, as reduced accruals can boost performance
Capital Efficiency	Excessively high provision coverage will reduce capital utilization efficiency and impact shareholder returns
Financial Aggressiveness	Financial analysis shows Hangzhou Bank has been rated as adopting an “aggressive” accounting policy [0]
Downside Risk	If asset quality deteriorates, the provision coverage ratio may decline rapidly (it has already dropped from 565% to 520%)

• Migration trend of special-mention loans (new non-performing loans amounted to RMB 3.453 billion in H1 2025) [1]
• Exposure risk in the real estate sector (accounting for 32.84% of total non-performing loans) [1]
• Balance between write-offs and recoveries (write-offs amounted to RMB 2.493 billion, while cash recoveries reached RMB 0.512 billion in H1 2025) [1]

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1. From a regulatory perspective
   : 203% far exceeds the 120%-150% regulatory requirement,
   surpassing the regulatory ceiling by 35%

2. From an industry comparison perspective
   : 203% has exceeded the overall commercial bank average of 208%, placing it in the upper-mid tier of the industry

3. From actual data
   : Hangzhou Bank’s actual provision coverage ratio is 520%, which is at a
   leading industry level
   , providing extremely strong risk mitigation capacity

4. However, it should be noted
   : Excessively high provision coverage may impact capital efficiency, and the bank needs to strike a balance between risk prevention and control and profitability

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[0] 2024 Annual Report of Bank of Hangzhou Co., Ltd. (https://stockn.xueqiu.com/SH600926/20250411236272.pdf)

[1] China Chengxin International - Credit Rating Report on Bank of Hangzhou Co., Ltd.'s 2025 Perpetual Capital Bonds (https://www.chinamoney.com.cn/dqs/cm-s-notice-query/fileDownLoad.do?contentId=3235957&priority=0&mode=save)

[2] Jiemian News - 2025 Banking New Landscape: Sound Risk Control with Hidden Worries, Adjustment and Transformation Show Dawn (https://www.jiemian.com/article/13841448.html)

[3] Securities Times - How to View the Slight Decline in Commercial Banks’ Provision Coverage Ratio in Q1 (https://stcn.com/article/detail/1835110.html)

[4] Caifuhao - Comparative Analysis of the Excellent City Commercial Bank Hangzhou Bank’s H1 2025 Interim Report (https://caifuhao.eastmoney.com/news/20250907205125661065470)