Yu Jianzhong's Mid-Course Adjustment: Tianjin Bank Turns at the Trillion-Yuan Threshold

Tianjin Bank, which is approaching a trillion-yuan asset scale, is currently grappling with growing pains associated with its transformation.

Amid its digital transformation and shift toward retail banking, the bank has been fined five times within six months, and its non-performing rate on personal loans has hit a new high—laying bare both its compliance shortcomings and asset quality pressures.

In response to these challenges, Tianjin Bank Chairman Yu Jianzhong has advocated prioritizing quality over scale. Whether this quality-first objective can truly be implemented hinges on the bank’s ability to first resolve its compliance and profitability issues.

The Pain of Non-Compliance: Five Penalties in Six Months Reveal Systemic Weaknesses

Tianjin Bank is currently undergoing strategic transformation, yet it has repeatedly encountered compliance issues over the past six months.

Most recently, it was fined RMB 200,000 by the Tianjin Financial Regulatory Bureau for failing to report an external service disruption involving a critical information system. Earlier, it received a RMB 900,000 penalty for inadequate performance of the 'three checks' in lending and failures in employee management. Relevant individual Zhu Honghai was also banned from working in the industry for 12 years. In total, the bank received five administrative penalty notices within half a year, amounting to fines exceeding RMB 1.7 million.

Source: Tianjin Financial Regulatory Bureau

These regulatory penalties send three clear signals to the market.

First, the bank’s weaknesses in compliance and internal controls are particularly pronounced.

The author notes that the penalties cover multiple areas, including the 'three checks' in credit operations, employee conduct management, compliance in trust product sales, financial reporting, and information system submissions. This indicates that Tianjin Bank’s compliance issues are not isolated to one or two areas; rather, its entire internal control framework may be flawed, and a culture of compliance has yet to fully permeate frontline staff.

Second, compliance gaps during digital transformation.

Tianjin Bank is not alone in its information system violations across the banking sector. According to reports from the Shanghai Securities News, major state-owned banks—including ICBC, China Construction Bank, and Bank of Communications—have recently been fined by the National Financial Regulatory Administration for inadequate risk controls related to critical information systems. This shows regulators have now extended their oversight to include the infrastructure underpinning digital finance.

Source: Shanghai Securities News

Clearly, Tianjin Bank and some other institutions lack effective risk assessment mechanisms in their digital transformation efforts, reflecting a mindset that prioritizes system deployment over governance—ultimately crossing regulatory red lines.

Third, a comprehensive upgrade in regulatory orientation.

Tianjin Bank’s situation exemplifies the broader shift in financial regulatory policy. Recently, the National Financial Regulatory Administration, together with the People’s Bank of China and the China Securities Regulatory Commission, issued the 'Guidelines on Data Classification and Grading for Financial Information Services,' which establishes rules for classifying and grading data used in financial information services.

Source: Cyberspace Administration of China

It is evident that regulatory scrutiny has expanded beyond traditional credit and fund-related violations to encompass compliance governance of financial information service data. For Tianjin Bank to achieve high-quality development, it must embed compliance into the core of its business operations.

Asset Pain: The Aftermath of Retail Lending’s 'Breakneck Expansion'

If regulatory fines are viewed as external disciplinary measures from regulators, then deteriorating asset quality represents the internal growing pains of strategic realignment. In recent years, Tianjin Bank has also faced risks in its retail lending segment.

As of last year, Tianjin Bank’s non-performing loan (NPL) ratio for personal loans rose to 4.64%, the highest since its listing; the balance of NPLs reached RMB 3.71 billion, accounting for 44.82% of total NPLs. The root cause of this surge in bad loans lies in the bank’s 'retail-first' strategy pursued between 2017 and 2019.

Source: Tianjin Bank official website

At that time, in an effort to rapidly expand its asset base, Tianjin Bank partnered with internet traffic giants such as Meituan and Ant Group, directing funds toward underserved segments like food delivery riders and young internet users, leveraging platform traffic to capture scale-driven gains. Personal consumer loans once accounted for more than 72% of its loan portfolio.

While this loan-assisted model generated significant asset growth, it also caused Tianjin Bank to lose control over its first line of risk management. Under this arrangement, customer acquisition and borrower screening were controlled by the internet platforms, relegating the bank—merely a capital provider—to a secondary role and sowing the seeds for concentrated risk exposure down the line.

With tightened regulatory oversight, previously accumulated risks have now fully surfaced, causing a sharp rise in the NPL ratio on Tianjin Bank’s retail side. In response, the bank proactively reduced its personal loan portfolio by RMB 17.3 billion last year—a 17.8% decline.

However, this approach creates a 'denominator effect': while the total loan amount (the denominator) shrinks, existing bad debts (the numerator) cannot be immediately written off, thereby significantly inflating the reported NPL ratio.

Thus, the 4.64% NPL ratio on personal loans reflects both the cost of inadequate prior risk controls and the unavoidable pain of current risk resolution efforts.

Profitability Challenges: Shrinking Non-Interest Income and Capital Erosion

Beyond asset quality pressures, Tianjin Bank’s overall business performance also faces headwinds. Last year, the bank reported revenue of RMB 16.955 billion and attributable net profit of RMB 3.866 billion, reflecting only modest growth—largely attributable to its business structure.

Source: Tianjin Bank official website

Tianjin Bank’s non-interest income has a relatively narrow business structure, primarily relying on investment income and fee and commission income. Within this, fee and commission income is heavily dependent on traditional intermediary services such as agency and underwriting—activities with low entry barriers—and lacks strategic positioning in high-value-added businesses like wealth management and asset custody.

As a result, Tianjin Bank lacks sufficient resilience to withstand market volatility. Last year exemplified this: its investment income amounted to RMB 1.98 billion, down 23.9% from the previous year, while net fee and commission income stood at RMB 1.185 billion, a decline of 29.45%, directly impacting the bank’s profitability.

Source: Tianjin Bank official website

Moreover, Tianjin Bank’s capital adequacy ratio continues to decline.

The bank’s core capital has decreased for four consecutive years. As of the end of 2025, its Common Equity Tier 1 (CET1) capital adequacy ratio had fallen to 9.08%, intensifying pressure on its capital position.

After scaling back its retail operations, Tianjin Bank has had no choice but to expand corporate banking to stabilize its balance sheet size. Last year, its corporate loan balance reached RMB 391.603 billion, surging by 17.2%. As is well known, every loan a bank extends requires corresponding capital backing—and corporate lending consumes significantly more capital than retail lending—further straining its already tight core capital base.

With just one step away from reaching RMB 1 trillion in total assets, Tianjin Bank faces mounting pressure and must urgently identify optimal solutions to enhance both profitability and core capital strength.

Path Forward: Tackling Legacy Issues with Bold Management to Move Lighter and Faster

Faced with the inevitable growing pains of transformation and longstanding legacy issues, Tianjin Bank’s management has demonstrated a strong sense of responsibility and willingness to confront challenges head-on.

This year, Yu Jianzhong, Chairman of Bank of Tianjin, proposed the strategy of 'maintaining prudent operations and prioritizing quality over scale,' and elevated 'litigation management' to the same level of importance as other core business metrics, signaling the bank’s determination to resolve historical issues and move forward with a lighter balance sheet. To implement this strategy, Bank of Tianjin is focusing efforts on two fronts:

First, strengthening pre-emptive compliance and risk management.

If proactive risk prevention remains inadequate, problems will persist and litigation cases will continue to rise. Therefore, Bank of Tianjin has developed an 'AI Compliance Officer' based on a core architecture combining 'large AI models + knowledge base,' and has also built 58 compliance-monitoring early-warning models. This enables the bank to proactively identify risks and issue alerts in advance, creating room for timely intervention rather than reacting passively after issues arise.

This approach not only reduces violations and avoids regulatory penalties but also strengthens the bank’s foundational stability for sustainable growth.

Second, accelerating the clearance of legacy risks and upgrading its credit risk control models.

In addressing the burden of legacy non-performing retail loans, Bank of Tianjin has proactively scaled back high-risk internet-based co-lending activities and accelerated the resolution of existing non-performing assets through bulk transfers and multi-channel recovery methods. Additionally, the bank continues to iteratively refine and update its internet lending risk control models to enhance both decision-making efficiency and risk management capabilities.

Conclusion

The RMB 1 trillion asset threshold is within reach, and Bank of Tianjin will inevitably cross it sooner or later. However, recent developments suggest that more critical than joining the trillion-asset club is overcoming its historical baggage and navigating the current pains of transformation.

In an increasingly competitive environment, compliance is a non-negotiable baseline, and asset quality is equally vital. For Bank of Tianjin, the present challenges serve as both a mirror reflecting its own condition and an opportunity for deep-rooted remediation. Whether it can truly embed compliance and risk control into its corporate DNA during this 'mid-game adjustment' will determine if it can firmly establish itself within the trillion-asset club in the future.

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