Capital Injection! Postal Savings Bank Takes Off Again!

In September 2024, the National Financial Regulatory Administration announced plans to inject capital into six major commercial banks. The 2025 Government Work Report further proposed "issuing special treasury bonds worth 500 billion yuan to support large state-owned commercial banks in replenishing capital."

On the evening of March 30, 2025, the Postal Savings Bank of China (PSBC) announced plans to raise 130 billion yuan by issuing shares to specific entities, including the Ministry of Finance, marking a substantial step in the "massive" capital injection for state-owned banks.

Unlike the "Big Five" banks (ICBC, ABC, BOC, CCB, and BoCom), which underwent large-scale bad asset disposals and capital injections in the early 2000s, PSBC—despite being a major bank—never received such treatment. As a result, its capital adequacy ratio has consistently been the lowest among the "Big Six" banks.

Capital Injection! Postal Savings Bank Takes Off Again!

According to the Commercial Bank Capital Management Measures and policies for systemically important banks, PSBC’s minimum capital adequacy ratio requirement may be 8%-9%. Over the past five years, its actual core capital adequacy ratio has hovered slightly above 9% (see table above), barely meeting the baseline requirement. The low capital adequacy ratio has significantly constrained PSBC’s business development.

Thus, compared to the other five major banks, the capital injection is like "timely rain after a long drought" for PSBC, greatly boosting its business growth, stabilizing asset quality, and enhancing its ability to serve the real economy.

But how much of a positive impact will the 130 billion yuan injection have on PSBC?

Based on PSBC’s 2024 financial metrics and assuming stable proportional relationships with the new capital, the following estimates can be made:

Using the average core tier-1 capital adequacy ratio of the "Big Four" banks (ICBC, ABC, BOC, CCB) in recent years, if PSBC targets a post-injection core tier-1 capital adequacy ratio of 14%, the 130 billion yuan capital injection will support 928.571 billion yuan in risk-weighted assets (Note: Capital ÷ Risk-weighted Assets = Capital Adequacy Ratio).

According to PSBC’s annual report, its risk-weighted assets accounted for 50.44% of total assets in 2024. Assuming the same ratio for the newly injected capital, 928.571 billion yuan in risk-weighted assets would support 1,840.943 billion yuan in total assets.

In other words, the 130 billion yuan injection would increase PSBC’s total assets by an additional 1,840.943 billion yuan. At the end of 2024, PSBC’s total assets stood at 17.08 trillion yuan. Factoring in organic growth, its total assets could reach 20 trillion yuan by the end of 2025.

In 2024, PSBC’s loan balance accounted for 52.17% of total assets. If the same ratio applies to the new assets, the 1,840.943 billion yuan increase in total assets would translate to 960.420 billion yuan in new loans.

With a 2024 net interest margin of 1.87%, 960.420 billion yuan in new loans would generate approximately 18 billion yuan in operating income.

Based on a 2024 net profit-to-revenue ratio of 24.86%, 18 billion yuan in revenue would yield around 4.5 billion yuan in net profit.

Additionally, with a 2024 non-performing loan (NPL) ratio of 0.90%, 960.420 billion yuan in new loans would absorb 8.6 billion yuan in NPLs.

Note!! The above estimates are based on proportional relationships from PSBC’s 2024 financial statements, assuming these ratios remain stable. The calculations apply only to the newly injected 130 billion yuan (excluding existing capital).

If these ratios become unstable—particularly if capital adequacy requirements increase for the entire balance sheet (including existing capital)—a significant portion of the 130 billion yuan may need to cover existing capital, reducing the estimated effects.