BANK OF GANSU (02139.HK) has drawn market attention with a proposed dividend distribution of approximately 1.778 billion yuan, which is about three times its net profit attributable to shareholders for the year.

The bank's 2025 profit and distribution plan, recently disclosed, shows that after comprehensive consideration of shareholder returns and future development, the board of directors, at a meeting held on March 27, 2026, recommended a dividend of 1.18 yuan per 10 shares (before tax), totaling roughly 1.778 billion yuan.

This dividend distribution proposal will be submitted to the 2025 Annual General Meeting for approval.

The significant attention stems from BANK OF GANSU's 2025 financial performance. According to its annual report, the bank reported a net profit attributable to shareholders of 588 million yuan for 2025, a year-on-year increase of about 1%. Based on this figure, the proposed dividend amounts to approximately 302% of the annual net profit.

As of the end of 2025, the bank's retained earnings on a consolidated basis stood at 5.221 billion yuan, with total equity reaching approximately 34.375 billion yuan. Therefore, the 1.778 billion yuan dividend is not primarily covered by current-year profits but is largely allocated from previously accumulated retained earnings. This payout represents about 34.1% of its year-end retained earnings and 5.2% of its total equity.

However, this substantial cash distribution, which far exceeds the annual profit, occurs against a backdrop of limited profit growth, pressure on net interest margins, and persistently high risk costs, raising market concerns about the bank's profit retention and operational stability.

In 2025, BANK OF GANSU achieved operating income of 5.421 billion yuan, a decrease of 9.0% year-on-year. Net interest income fell by 4.8%, and the net interest margin dropped from 1.18% to 1.09%. The cost-to-income ratio increased from 38.2% to 41.60%. Although the bank posted a 1% increase in net profit attributable to shareholders, this growth did not stem from an improvement in revenue but was largely due to a reduction in impairment loss provisions boosting profits.

Regarding asset quality, the bank's non-performing loan balance was 4.323 billion yuan as of December 31, 2025, a slight decrease of 17.6 million yuan from the previous year. The non-performing loan ratio remained flat at 1.93%, while the provision coverage ratio declined by 3.22 percentage points to 130.83%. Although asset impairment losses decreased by 15.2% year-on-year, they remained high at 2.63 billion yuan.

Notably, BANK OF GANSU has generally maintained a conservative dividend policy, having not paid a final dividend for six consecutive years. According to past annual reports, the bank did not distribute a final dividend for the fiscal years 2019 through 2024. Its last profit distribution was the final dividend for the 2018 fiscal year, which was 0.1022 yuan per share (before tax), totaling approximately 1.029 billion yuan.

As of the end of 2025, the bank's core tier 1 capital adequacy ratio was 11.07%, its tier 1 capital adequacy ratio was 12.07%, and its total capital adequacy ratio was 12.07%, all meeting regulatory requirements.

In terms of shareholder structure, the bank's total share capital was 15.07 billion shares as of year-end 2025, comprising 11.276 billion domestic shares and 3.794 billion H-shares. Its major shareholders include Gansu Provincial Highway, Aviation and Tourism Investment Group Co., Ltd. as the largest shareholder with a 17.63% stake, and Gansu Provincial State-owned Assets Investment Group Co., Ltd. as the second-largest shareholder with 12.67%. Other significant shareholders hold stakes of 6.53%, 5.61%, and lower percentages. Combined, shareholders associated with Gansu local state-owned assets hold approximately 63.30% of the shares. Based on the proposed dividend of 1.18 yuan per 10 shares, these local state-owned shareholders would receive dividends totaling about 1.126 billion yuan.

According to its official website, BANK OF GANSU is a provincial state-owned city commercial bank directly managed by the Gansu Provincial Committee and Government. It officially commenced operations on November 19, 2011, and was listed on the Main Board of the Hong Kong Stock Exchange on January 18, 2018. It operates 199 branches across Gansu province.