Bank Of Qingdao Co.,Ltd. has announced a proactive withdrawal from its internet co-branded consumer lending operations, citing regulatory compliance requirements and credit risk control measures. This makes it the first listed bank in China to publicly declare such a strategic move. The decision comes as the bank's retail loan asset quality faces mounting pressure, with the non-performing loan (NPL) ratio for retail loans surging to 3.39% in the first half of 2026—substantially higher than the bank's overall NPL level. Retail NPLs reached RMB 2.444 billion, representing approximately 60% of the bank's total non-performing loans.

During the bank's 2026 interim results briefing, Chairman Jing Zailun discussed the retail credit landscape, revealing that personal consumer loans primarily consist of internet consumer lending and credit card operations. He noted the bank's deliberate move to wind down internet co-branded consumer loan products, which resulted in a significant contraction of its internet consumer loan portfolio during the first half. As of June 30, 2026, personal consumer loan balances stood at RMB 13.731 billion, down RMB 2.503 billion (15.42%) from year-end 2025, while personal internet loan balances decreased to RMB 9.739 billion, a drop of RMB 591 million.

This contraction contrasts sharply with other retail loan categories: personal business loans continued to grow, and residential mortgage balances declined by less than 3%. Historically, internet lending served as a key growth engine for Bank Of Qingdao Co.,Ltd.'s retail credit expansion. The bank initiated its internet lending strategy in 2017, positioning consumer finance at the core of its retail transformation, and signed a strategic cooperation agreement with Meituan-Dianping Group in October of that year to explore the "finance plus internet" service model.

Between 2018 and 2021, the bank's retail loan portfolio expanded from RMB 41.35 billion to RMB 76.743 billion, representing growth exceeding 80%. Personal consumer loans experienced explosive growth in 2019, jumping from RMB 3.828 billion to RMB 9.47 billion—a 147% increase—and then doubling again in 2021 to reach RMB 19.015 billion. The bank's 2021 annual report acknowledged that "online consumer loans developed through internet channels grew rapidly," with 2.29 million internet loans disbursed that year totaling RMB 19.488 billion. Online consumer loan balances surged from under RMB 4 billion to over RMB 10 billion, up nearly 160% year-on-year.

In April 2021, the bank launched "Hairong Yidai," its first proprietary pure-credit internet consumer loan product, marking the official start of its self-operated internet lending business. However, subsequent years saw volatility: in 2022, tighter regulatory oversight on cross-provincial internet lending pushed provincial loan concentration to 85.63%. By 2023, as the consumer credit market recovered, personal consumer loans peaked at RMB 21.843 billion, with internet loan balances reaching RMB 13.381 billion—both all-time highs.

More recently, Bank Of Qingdao Co.,Ltd. has shifted its internet lending strategy, aligning with regulatory guidance to strengthen risk management and compliance. The bank has optimized its partner institutions and business models. By year-end 2025, personal consumer loan balances had fallen to RMB 16.234 billion (down RMB 3.887 billion), while internet loan balances declined to RMB 10.330 billion (down over RMB 2 billion). Nevertheless, the bank's facilitated lending model still accounts for a substantial portion of its internet loans. According to a credit rating report by New Century Rating, this model relies on third-party platforms for customer acquisition, with some sub-products utilizing financing guarantee companies or insurance firms for credit enhancement, alongside joint lending arrangements with licensed institutions.

Founded in November 1996, Bank Of Qingdao Co.,Ltd. listed on the Hong Kong Stock Exchange in December 2015 and on the Shenzhen Stock Exchange in January 2019, making it Shandong Province's first listed bank and the second city commercial bank with dual A+H listings in China. The decision to exit internet co-branded consumer lending stems from risk considerations, as the chairman acknowledged during the earnings call that rising market risks prompted the bank to proactively terminate these business lines to meet regulatory expectations and safeguard asset quality.

The bank's 2026 interim report reinforces this approach, stating that it is systematically advancing its internet lending strategy transformation, optimizing partner arrangements and business models, and refocusing on self-operated credit operations to strengthen risk controls and compliance. The deterioration in retail asset quality has been gradual but unmistakable: from 2018 to 2019, the retail NPL ratio improved from 0.76% to a record low of 0.46%, before inching up to 0.89% during 2020-2022. The year 2023 marked a turning point, with the ratio breaking through 1%, followed by another crossing of 2% in 2024. By the first half of 2026, the retail NPL ratio had climbed to 3.39%, against an overall bank NPL ratio of just 0.95%.

At the end of June 2026, retail NPLs totaled RMB 2.444 billion, accounting for roughly 60% of the bank's RMB 4.065 billion in total non-performing loans. Internet co-branded consumer lending has been a critical variable in this asset quality deterioration. These arrangements typically operate with internet platforms leveraging their traffic and technology to handle customer acquisition, initial risk screening, and post-lending management, while the bank provides final approval and funding. In favorable market conditions, this model enabled banks to break geographic boundaries at relatively low cost, diversify assets, and scale rapidly—but at the expense of dependency on third-party platforms and revenue sharing that erodes margins. When macroeconomic conditions shift, credit risks from subprime customer segments can spike, exposing banks to significant asset quality shocks.

Platform risks also transmit to partner banks. Complaints filed on third-party consumer protection platforms show multiple customers reporting that some of Bank Of Qingdao Co.,Ltd.'s partners imposed additional guarantee and service fees, pushing actual annualized interest rates well above contractual terms and, in some cases, exceeding statutory caps. In October 2025, new regulations on commercial bank internet assisted lending took effect, mandating partner list management, strengthening accountability, imposing strict caps on comprehensive financing costs, and instituting severe penalties for violations.

Amid rising industry risks and escalating regulatory pressure, smaller banks are accelerating their retreat from facilitated lending. Industry statistics indicate that over 100 assisted lending, credit enhancement, and customer acquisition institutions have lost bank partnerships, while numerous banks have significantly pared down their partner whitelists, retaining only top-tier platforms. During the earnings briefing, the chairman also outlined future retail credit plans, including the September launch of a new proprietary consumer loan product called "Youyidai," aimed at boosting growth in self-operated consumer lending.