Wu Kezhao takes over Huari Bank facing a test: personal loans account for over 80%, can the trillion-dollar retail chess game be broken through?

Article | Xiao Fang

Source | Fortune Unicorn

Recently, Huashui Bank announced that it has received approval from the Shanghai Regulatory Bureau of the China Banking and Insurance Regulatory Commission to appoint Wu Kezhao as Chairman.

While filling the leadership gap, Wu Kezhao faces not a blank slate but a dual challenge: one of performance recovery and another of compliance and service obligations.

A more practical challenge is managing the high retail business proportion, balancing profit recovery with expense consumption, and how to simultaneously build compliance and sustain business. The significance of Wu Kezhao’s appointment as Chairman reflects these issues.

01

With the new Chairman in place, will Huashui Bank’s focus continue to shift toward personal loans?

Public information shows that Huashui Bank has long had a business focus closely related to retail banking. This is evident in its loan composition. According to Shanghai Huashui Bank’s 2024 Annual Report, as of the end of 2024, total loans and advances (excluding accrued interest) were 36.408 billion yuan, a 15.07% increase from the end of the previous year. Of these, corporate loans and advances totaled 4.481 billion yuan, accounting for 12.31%, while personal loans and advances totaled 30.829 billion yuan, accounting for 84.68%.

Image source: Shanghai Huashui Bank 2024 Annual Report

Another set of figures from the 2024 report reveals a different aspect of Huashui Bank’s operations. The report states that in 2024, the bank received a total of 1,418 financial consumer complaints across all channels, with a 100% resolution rate within the stipulated period. The majority of complaints (95%) were related to other personal consumer loans, with fewer complaints in other categories. The bank’s complaint clients are mainly located in Jiangsu, Anhui, Zhejiang, Jiangxi, Guangdong, Liaoning, and Shanghai.

To some extent, Huashui Bank’s high proportion of personal loans and the dominance of “other personal consumer loans” in complaint categories indicate that service quality and management of retail-related business significantly impact customer experience and compliance costs.

Image source: Shanghai Huashui Bank 2024 Annual Report

If over 90% of the 1,418 complaints are about “other personal consumer loans,” then the regulatory fines imposed in 2025 highlight the compliance pressures faced by Huashui Bank.

On February 8, 2025, the Administrative Penalty Information Disclosure Form from the Shanghai Regulatory Bureau of the China Banking and Insurance Regulatory Commission (Hu Jin Fa Zhi [2025] No. 68) shows that Shanghai Huashui Bank Co., Ltd. was fined a total of 6.80116088 million yuan for issues including “inadequate performance-based compensation management, unauthorized senior management duties, issuing credit loans to related parties, inaccurate loan classification, under-provision of impairments, serious violations of prudent banking rules, illegal deposit-taking, loan-related charges, mispricing, excessive risk exposure, illegal parking space loans, and inadequate separation of IT operations and system development.”

Image source: Official screenshot from the National Financial Regulatory Administration website

However, Huashui Bank’s fines are not limited to this. On June 27, 2025, the Shanghai Branch of the People’s Bank of China issued an administrative penalty notice (Shanghai Yin Fa Zi [2025] No. 18), showing that Huashui Bank was fined 296,400 yuan for “violating regulations on the collection, provision, and inquiry of credit information.”

Image source: Official website of the People’s Bank of China

Similarly, on October 11, 2025, the Shanghai Regulatory Bureau of the China Banking and Insurance Regulatory Commission issued a penalty (Hu Jin Fa Zhi [2025] No. 171, 172), fining Huashui Bank 700,000 yuan for “insufficient data security management in the production environment and incomplete rectification of issues found during on-site inspections.”

Image source: Official screenshot from the National Financial Regulatory Administration website

From these, it’s clear that Wu Kezhao’s appointment as Chairman adds a layer of certainty, but it’s not just about personnel changes. The public figures—retail share, complaints, fines—paint a picture. The real focus is whether the new leadership can, on the basis of continuity, gradually streamline operational metrics.

02

Performance trajectory is traceable; net fee and commission income deserves attention

Huashui Bank’s operational quality over the past three years shows a clear trend. The 2022 annual report states that in 2022, the bank achieved operating income of 970 million yuan, but net profit attributable to shareholders was a loss of 341 million yuan.

Image source: Shanghai Huashui Bank 2022 Annual Report

By 2023, the bank reported operating income of 1.463 billion yuan and a net profit of 53 million yuan, turning losses into profits.

Image source: Shanghai Huashui Bank 2023 Annual Report

In 2024, the annual report shows operating income increased to 2.067 billion yuan, with net profit attributable to shareholders rising to 220 million yuan. These figures indicate that Huashui Bank has moved out of loss and entered a phase of continuous profitability. However, given the bank’s heavy focus on retail, management challenges are concentrated there. The high retail share often entails ongoing costs for customer acquisition, traffic diversion, and service expenses. Whether these investments translate into stable income growth directly affects profit quality.

Image source: Shanghai Huashui Bank 2024 Annual Report

Beyond overall profit figures, it’s necessary to analyze the income structure. In 2022, Huashui Bank’s net fee and commission income was -287 million yuan, with fee and commission expenses of 324 million yuan. In 2023, net fee and commission income was -528 million yuan, with expenses of 546 million yuan.

Image source: Shanghai Huashui Bank 2023 Annual Report

In 2024, net fee and commission income was -923 million yuan, with expenses of 935 million yuan. Over three years, net fee and commission income has been continuously negative and the losses have increased each year, indicating that expense pressures are a persistent challenge alongside scale expansion.

Image source: Shanghai Huashui Bank 2024 Annual Report

Looking at these three years together, it’s clear that net fee and commission income remains a significant factor affecting performance. This data not only reflects profit fluctuations but also impacts operational quality. The 2024 report shows that net interest income reached 2.827 billion yuan, up 43.56% year-on-year. While rising interest income is positive, the long-term negative net fee and commission income can add instability to profits. For banks with a high retail share, ongoing costs for customer acquisition, traffic, and service can lead to a mismatch between scale growth and profit growth.

Image source: Shanghai Huashui Bank 2024 Annual Report

In terms of asset quality and risk buffers, the 2024 report shows that at year-end, non-performing loan (NPL) ratio was 1.65%, and the provision coverage ratio was 169.96%. Capital adequacy ratios at year-end were: capital adequacy ratio 12.99%, Tier 1 capital adequacy ratio 11.87%, and core Tier 1 capital adequacy ratio 11.87%.

Combining performance recovery with fines, Huashui Bank appears to be in a relatively typical stage: operational quality has improved, but management still faces challenges, especially in areas like loan disbursement, post-loan management, customer identification, and reporting. For the new leadership, the challenge is not just about growth or profits but ensuring that details—such as loan payments, follow-up, customer recognition, and compliance—are managed meticulously. The goal is to avoid “adding chaos” in these details, ensuring profit recovery remains on track.

03

New leadership confirmed; operational quality, cost efficiency, and compliance must not be neglected

Over recent years, Huashui Bank has shown signs of recovery in profitability, asset expansion, and interest income growth, but attention is also needed on fee expenses, net income, and risk buffers. The new leadership’s appointment should promote simultaneous improvement in operational quality and compliance, amid increasing competition and internal pressures.

Particularly, Huashui Bank’s large retail business offers revenue potential, but it demands higher standards in front-end marketing, credit review, payment management, post-loan follow-up, and customer communication. Any lapse in these areas can directly lead to increased complaints and penalties. Whether the new Chairman can stabilize the overall situation depends not just on continuing retail operations but on elevating retail service quality.

Looking at the three-year data, Huashui Bank’s profits have shown signs of recovery, but the “growth” in income and “expenses” have not moved in the same direction. In 2024, net interest income was 2.827 billion yuan, up 43.56%, and net profit attributable to shareholders was 220 million yuan, indicating main income recovery. However, net fee and commission income was -923 million yuan, with expenses of 935 million yuan, and the negative trend has widened, showing ongoing cost pressures despite profit growth.

For a bank still expanding, scale is important, but the key is whether input-output efficiency improves year by year. As of the end of 2024, personal loans and advances accounted for 84.68%, with retail remaining the core focus. Meanwhile, complaint totals were 1,451 in 2022, 1,206 in 2023, and 1,418 in 2024, with all complaints resolved within 30 days or the stipulated period. While resolution efficiency is commendable, fluctuations in complaint volume indicate ongoing needs for service, process, and compliance improvements.

After the approval of the new Chairman’s appointment, leadership gaps are filled, but the real test lies in whether profits can continue to grow, costs can be optimized, customer retention stabilized, complaints reduced, and compliance culture strengthened. If expenses remain high long-term, even rapid income growth may limit profit margins. For the new Chairman, the focus should not be solely on scale expansion but on synchronizing growth, costs, service, and compliance to strengthen the foundation and ensure sustainable profit improvement. We shall wait and see.