Free Trial

REPEAT: Moody's Ups China Bank System Outlook To Stable

Repeats Story Initially Transmitted at 04:19 GMT Jul 27/00:19 EST Jul 27
     BEIJING (MNI) - Moody's Investor Service has revised its outlook on China's
banking system to stable from negative, pointing to improved asset quality in
the sector and efforts by the Chinese government to curb shadow banking. 
     Moody's said Thursday that the revision "reflects our expectations that
nonperforming loan formation rates will be relatively stable at current levels."
Its previous negative outlook stemmed from what it said was a deterioration in
banks' asset quality in 2015 and 2016. 
     The government's "more coordinated policy measures" on shadow banking "will
help mitigate asset risks for banks, and address some key imbalances in the
financial system," the ratings agency added.
     Moody's assessed five components of the banking sector in making the
upgrade, with three of the five -- operating environment; asset quality and
capital; and systemic support -- getting "stable" grades, while two of the
components -- funding and liquidity; and profitability and efficiency -- were
rated as "deteriorating."
     The operating environment will be helped by policies to encourage
investment in specific sectors, such as infrastructure and the construction of
self-occupied residential properties, as would government efforts to contain
financial risks, including its financial deleveraging drive, it said.
     But banks' profit growth will be constrained by a number of factors,
Moody's said, including "continued pressure on net interest margins and slower
growth in fee income," because of tighter liquidity conditions and stricter
regulations on shadow banking activities, particularly in wealth management.
     Over the past year, Moody's has changed its outlook for most of the 24
individual banks it rates in China to stable from negative, with banks having
stable outlooks now accounting for a combined 89% of total assets held by the
Moody's-rated banks.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
}); window.REBELMOUSE_ACTIVE_TASKS_QUEUE.push(function(){ window.dataLayer.push({ 'event' : 'logedout', 'loggedOut' : 'loggedOut' }); });