Weihai City Commercial Bank Co., Ltd. (9677.HK): BCG Matrix [Dec-2025 Updated]

Weihai City Commercial Bank's portfolio is powered by high-growth Stars-inclusive small-business lending, digital banking, green finance and supply-chain finance-that demand continued investment, while robust Cash Cows in corporate banking, financial markets, low-cost retail deposits and leasing generate the steady cash flow to fund that expansion; several Question Marks (wealth management, cross-border trade, consumer finance and investment banking) require targeted capital and strategic choices to scale, and underperforming Dogs (legacy remittances, custody services, risky old-industry loans and obsolete kiosks) should be pruned to protect capital-read on to see where the bank should double down, pivot or divest.

Weihai City Commercial Bank Co., Ltd. (9677.HK) - BCG Matrix Analysis: Stars

Stars - Inclusive finance for small enterprises maintains high growth momentum. As of late 2025, inclusive small and micro-enterprise loan balance reached RMB 31.03 billion, representing a year-on-year growth of 13.5%+. The segment serves over 75,000 active customers via a specialized online lending model emphasizing 'short, small, frequent, and urgent' products. Average contracted interest rate is 5.08%, enabling deep market penetration across Shandong province. The bank's 'full coverage of the province' branch and sub-branch network supports high relative market share in local inclusive finance, with targeted ROI improvement driven by focus on specialized and sophisticated SMEs.

Key metrics for Inclusive Small & Micro segment:

Drivers and strengths for this Star unit include:

• Extensive provincial footprint enabling rapid customer acquisition and cross-sell.
• Low average pricing (5.08%) balanced by scale and low operating cost per loan through online processes.
• Targeted underwriting for specialized/sophisticated SMEs improving portfolio quality and ROI.
• Strong year-on-year portfolio expansion supporting leadership in local inclusive finance markets.

Stars - Digital banking and technology finance initiatives drive operational efficiency and growth. The bank's digital transformation produced an annualized return on weighted average net assets (RoRWA) of 10.35% in 2025, supported by material CAPEX in fintech platforms, cloud infrastructure, and data analytics. Digital channel adoption among retail customers exceeds 72% of transaction volume, reducing manual processing and branch footfall. The bank received the 2025 Excellence in Digital Financial Innovation award for systematic consumer finance practices. Technology-driven services sustain a cost-to-income ratio near 30.40%, reflecting strong operating leverage despite industry-wide pressure on margins.

Key outcomes and competitive advantages of digital initiatives:

• Higher fee income via digital product penetration and instant lending/wealth modules.
• Lower marginal cost per transaction; enhanced scalability for retail and SME portfolios.
• Improved credit decisioning and risk monitoring via data analytics, reducing NPL formation.
• Platform capability enabling rapid roll-out of new products and third-party partnerships.

Stars - Green finance and Equator Bank initiatives expand market reach and strengthen ESG positioning. As Shandong's first designated 'Equator Bank,' green loan balances grew at an estimated 15% CAGR through 2025. The bank financed green intelligent manufacturing bases in the Yellow River Basin and issued RMB 1.0 billion in specialized green bonds in late 2024. Operating margins in green finance remain healthy due to preferential regulatory treatment, lower risk weights on eligible assets, and government-supported incentives. The bank's provincial leadership in sustainable finance results in high relative market share within Shandong's emerging green economy.

Strategic advantages in green finance:

• Policy tailwinds and preferential treatment reducing capital and funding costs.
• High relative share in provincial sustainable financing due to early-mover status.
• Enhanced brand and stakeholder goodwill supporting cross-selling to corporates and local governments.
• Stable operating margins supported by strategically priced project finance and bond issuance.

Stars - Supply chain finance leverages industrial cluster strengths and platform integration. Integration with the Shandong Hi-Speed Group ecosystem has delivered meaningful market share in regional supply chain financing. Net interest income from this segment increased by 2.52% year-on-year in early 2025, supported by platform marketing to upstream and downstream clients and asset-backed structures that mitigate credit risk. The bank employs real-time transaction monitoring and receivable-backed lending to maintain low default rates while benefiting from industrial upgrading and digital transformation across Shandong.

Supply chain finance strategic strengths include:

• Deep integration with regional industrial clusters producing stickier client relationships and higher cross-sell.
• Lower credit volatility due to transaction-backed structures and real-time monitoring.
• Scalable platform-led onboarding of supplier and buyer networks increasing fee and interest income.
• Alignment with provincial economic priorities supporting volume growth and policy support.

Weihai City Commercial Bank Co., Ltd. (9677.HK) - BCG Matrix Analysis: Cash Cows

Cash Cows - Corporate Banking

Corporate banking remains the primary revenue engine, contributing approximately 58.01% of the bank's total operating income. Total assets reached RMB 441.464 billion as of December 2025, with corporate loans forming the stable core of the balance sheet. Market growth in traditional corporate lending has stabilized at ~7.2% annually, delivering consistent cash flow to fund higher-growth initiatives. The group's net interest margin (NIM) stands at 1.23%, reflecting a modest year‑on‑year compression of 4 basis points. Low incremental capital expenditure requirements tied to long‑standing state‑owned enterprise relationships ensure high free cash flow generation and predictable earnings conversion.

Cash Cows - Financial Market Business

The financial market business provides stable investment returns through inter‑bank money market operations and debt securities trading, contributing materially to non‑interest income. Non‑interest income is expected to account for ~22% of total operating income in 2025, supported by a 5% expansion in commission and investment gains. The bank maintains a healthy capital adequacy ratio (CAR) of 15.74% after asset‑liability optimization, and benefits from declining bond yields that have bolstered investment income. A high relative market share in regional inter‑bank markets positions the bank as a liquidity provider and steady fee/investment income source.

Cash Cows - Personal Deposit Services

Personal deposit services provide a low‑cost funding base via an extensive branch network (nearly 130 branches) and a high market share among Weihai urban and rural residents. Traditional deposit growth is modest, but elevated retention and low churn underpin a stable return on average assets (ROAA) of 0.68%. The 'Happy Culture' brand drives customer loyalty and sustained local savings share. Minimal incremental investment is required for deposit acquisition, while deposit stability supplies liquidity for lending and market activities.

Cash Cows - Financial Leasing Subsidiary

The group's financial leasing subsidiary, the first leasing institution established by a bank in Shandong, generates diversified, non‑interest income streams. It holds a significant share of regional equipment leasing and contributed to group net profit growth of 1.54% year‑on‑year, reaching RMB 25.372 billion in early 2025. Operating margins are supported by specialized asset management and high‑quality collateral, producing steady earnings with moderate growth outlook - characteristic of a classic cash cow.

Summary Metrics for Cash Cow Segments

Key strengths of Cash Cow units

• Stable and dominant revenue contribution from corporate banking (58.01% of operating income).
• Low CAPEX and high free cash flow from established corporate relationships.
• Diversified non‑interest income via financial markets and leasing reduces earnings volatility.
• Low‑cost, high‑retention deposit base (ROAA 0.68%) supports liquidity and net interest spread.
• Healthy capital buffer (CAR 15.74%) and prudent asset‑liability management.

Weihai City Commercial Bank Co., Ltd. (9677.HK) - BCG Matrix Analysis: Question Marks

Dogs (Question Marks): this chapter examines four business units that occupy high-growth but low-relative-share positions and therefore require strategic investment to avoid becoming persistent Dogs.

Wealth management services: the market for public funds and wealth management products in China expanded by 18.9% year-on-year, creating a high-growth environment. However, Weihai Bank's net fee and commission income decreased by 2.40% in early 2025, primarily attributable to lower custody and fiduciary income. The bank is investing heavily in "pension finance" and an upgraded "wealth management" platform. High CAPEX is required for digital platform upgrades, API integrations, portfolio management systems, and talent acquisition to compete with larger national banks. Given the crowded competitive landscape, achieving dominant market share is uncertain.

• Market growth: public funds and wealth products +18.9% YoY.
• Fee income trend: net fee & commission income -2.40% (early 2025).
• Key investments: pension finance platform, wealth management platform, customer analytics, digital onboarding.
• Risks: platform CAPEX, talent costs, competition from national banks and fintechs.

Cross-border trade finance: international settlement and RMB cross-border flows are growing rapidly, supported by Belt and Road and regional trade agreements. Weihai Bank has agency relationships with 214 correspondent banks across 30 countries, but international settlement volumes remain a small fraction of total revenue (single-digit percent). The bank is marketing aggressively to existing corporate clients to scale cross-border trade finance, yet faces stiff competition from global banks with larger networks, lower unit costs, and advanced compliance tooling. Margins are under pressure due to high transaction processing costs and the need for enhanced AML/KYC and sanctions screening infrastructure. To transition this unit from Question Mark to Star will require significant operational investment and focused client acquisition.

• Agency network: 214 banks in 30 countries.
• Revenue mix: international settlement currently a single-digit % of total revenue.
• Growth drivers: Belt and Road, regional trade agreements, rising RMB cross-border settlement.
• Key constraints: transaction costs, compliance tech, onboarding speed vs global competitors.

Consumer finance innovation: Weihai Bank's "Pioneer Case for Boosting Consumption Action" targets younger demographics with online consumer loans and digital payment-linked credit. The online consumer loan market is growing at a CAGR of 7.1%, but the bank's relative market share remains in development. Investments are focused on AI-driven risk-control models, behavioral analytics, personalized marketing, and branded product launches under the "Weihai Bank" identity to attract Gen Z and Millennials. High customer acquisition costs and the need for robust credit impairment allowances are current drag factors, while long-term ROI depends on lowering cost per acquisition and controlling default rates.

• Market CAGR: online consumer loans +7.1% CAGR.
• Strategic investments: AI risk control, personalized offers, digital UX enhancements.
• Challenges: high acquisition costs, elevated credit impairment provisions.
• Brand play: leverage "Weihai Bank" identity for regional appeal.

Investment banking services: underwriting and advisory revenues have faced downward pressure, contributing to the overall 2.40% decline in fee-based revenue. The bank is pivoting toward debt capital markets, green bonds, sci-tech innovation bonds, and tailored financing for technology SMEs. Market demand for green and innovation-linked bonds is expanding rapidly, but Weihai Bank's underwriting volume remains in a growth phase and requires additional licensing, specialized talent, and compliance frameworks. High expertise requirements, regulatory shifts, and longer sales cycles make this segment high-risk/high-reward.

• Fee income impact: investment banking contributed to net fee & commission income -2.40% (early 2025).
• Growth areas: green bonds, sci-tech innovation bonds, DCM for SMEs.
• Needs: underwriting licenses, capital markets specialists, regulatory compliance.
• Risks: regulatory changes, expertise scarcity, cyclical capital markets.

Weihai City Commercial Bank Co., Ltd. (9677.HK) - BCG Matrix Analysis: Dogs

Traditional branch-based remittance services are experiencing sharply declining demand as digital banking adoption among Weihai City Commercial Bank customers reaches 72%. Over-the-counter (OTC) remittance and settlement transaction volumes fell by an estimated 28% year-on-year in 2024, reducing the segment's share of total transactions from 9.1% to approximately 6.5% of transaction counts. High fixed costs for branch staffing and counter infrastructure produce unit economics with sub-5% operating margins, while annual branch-related fixed costs tied to these simple transactions are estimated at RMB 85-120 million. The bank is consolidating its 'others' segment to improve efficiency and close or repurpose low-traffic counters.

Non-core fiduciary and custody businesses show stagnant to negative growth; net fee income attributable to these services declined by roughly 11% year-on-year in the latest reporting period, driven by client migration to national custodians and fintech platforms. Regional custody market share is estimated below 1.5% nationally for institutions of Weihai's scale, versus 18-22% for the top three national custodians. Asset impairment losses decreased by 13.47% year-on-year, but residual credit and operational risk in a scattered fiduciary portfolio remain material. Return on invested capital (ROIC) for these fiduciary units is estimated in the low single digits, with low projected growth, making them primary candidates for divestment or restructuring.

Legacy corporate loan portfolios concentrated in declining traditional manufacturing and high-pollution industries require intensive monitoring. Exposure to these sectors contributed materially to the bank's credit impairment losses of RMB 12.381 billion in early 2025. Segment-level non-performing loan (NPL) ratios for these industries are estimated at 3.8%-5.6%, versus the bank-wide NPL ratio of approximately 1.9%. The bank is reducing exposure-target remediation and runoff plans aim to lower outstanding balances in these sectors by 25%-35% over 18-24 months and reallocate capital toward green and technology-based lending with target spreads 50-120 bps higher than legacy assets.

Physical 'Video Banking' kiosks and standalone interactive terminals are facing obsolescence as customers prefer direct mobile app interactions. Utilization rates for deployed kiosks averaged under 8% in 2024, while maintenance and upgrade CAPEX averaged RMB 4.2 million annually for the deployed fleet. Projected ROI for these kiosks is negative relative to digital software investments: a marginal annualized return of approximately -3% when amortized CAPEX and operating expense are included. Market growth for standalone kiosks is negative; industry trends favor embedded 'invisible banking' services on personal devices. The bank plans to de-prioritize new investments and decommission poorly performing units.

• Immediate cost actions: accelerate closure or repurposing of ≤120 low-traffic counters; reallocate estimated RMB 60-100M in annual savings to digital channels.
• Fiduciary strategy: seek sale or JV for custody business within 12 months to reduce operational drag and free capital tied to low-margin fee income.
• Credit remediation: implement stricter covenants and targeted workout teams for legacy industrial exposures; maintain enhanced provisioning to manage volatility.
• Technology reallocation: halt new kiosk CAPEX, redeploy ~RMB 20-30M toward mobile app enhancements and API integrations to improve digital adoption and reduce servicing costs.