More NewsMoody’s Predicts Stability for China’s Banking System

Moody's Predicts Stability for China's Banking System

Moody’s Investors Service says that the outlook for China’s banking system is stable, as it has been since March 2011, reflecting Moody’s assessment that the overall performance of the country’s banks will remain in line with their rating levels in the next 12-18 months.

“Our stable outlook is further underpinned by our view that China will stay on a path of steady expansion and pursue an agenda of orderly reform; and we also note the pro-market announcements which have followed the Third Plenum of the Communist Party leadership in mid-November,” says Christine Kuo, a Moody’s vice president and senior credit officer.

Kuo was speaking on the release of Moody’s latest “Banking System Outlook: China”, and which covers the operating environment; asset quality and capital; funding and liquidity; profitability and efficiency; and systemic support.

In terms of challenges for the banks, the Moody’s report notes several pressure points that will mostly likely be reflected in their asset quality and profitability. These challenges will come from:

  1. Economic rebalancing
  2. Rising financial leverage
  3. Increasing interest rate liberalisation
  4. A greater shift towards higher-risk loan segments
  5. Continued large fluctuations in deposit flows.

Nonetheless, despite Moody’s expectation of lingering asset quality pressure, the report notes that the banks have strong loss-absorbing cushions, in the form of provisions and earnings, as buffers against the potential rise in credit costs.

Related Articles

Infosys Finacle to power Santander UK’s international cash management system

More News Infosys Finacle to power Santander UK’s international cash management system

4w The Global Treasurer
Preparing for GDPR? Here’s four things to consider

More News Preparing for GDPR? Here’s four things to consider

4m Elliott Wiseman
Cash flow in focus for investors

Cash Management Cash flow in focus for investors

5m Conor Deegan
Treasury TV: Karen Pugsley, Domino's Pizza Group

More News Treasury TV: Karen Pugsley, Domino's Pizza Group

5m Victoria Beckett
Treasury TV: Yeng Butler compares US and European MMF reforms

Compliance Treasury TV: Yeng Butler compares US and European MMF reforms

5m Victoria Beckett
Treasury TV: Tim de Knegt, The Port of Rotterdam

10 Minutes With The Treasury Treasury TV: Tim de Knegt, The Port of Rotterdam

5m Victoria Beckett
Banks are selling clients short with short dated cash deposit U-turns

Banking Banks are selling clients short with short dated cash deposit U-turns

6m Victoria Beckett
What does sterling’s Brexit boost mean for UK manufacturers?

More News What does sterling’s Brexit boost mean for UK manufacturers?

6m Tasja Botha