Moody's Affirms Bank of Ningbo's Baa2/P-2 Deposit Ratings with Stable Outlook

Strategic Insights -

Moody's Investors Service has reaffirmed Bank of Ningbo's Baa2/P-2 long-term/short-term local and foreign currency deposit ratings, as well as its ba1 Baseline Credit Assessment (BCA) and Adjusted BCA, following a review of the bank's creditworthiness. The stable outlook on the bank's long-term deposit ratings reflects Moody's expectation that Bank of Ningbo will maintain steady asset quality, capitalization, profitability, and liquidity over the next 12-18 months, with the support of the Chinese government remaining unchanged during this period.

Key Takeaways:

  • The affirmation of Bank of Ningbo's ratings and assessments reflects the bank's good asset quality, profitability, adequate capitalization, and sound liquidity, tempered by rapid loan growth.
  • The bank's asset quality will continue to be challenged by the unseasoned risks from its rapid loan growth, with the loan growth rate at 17.8% in 2024 and 19.8% in 2023.
  • Bank of Ningbo's non-performing loan (NPL) ratio increased materially due to rising asset risk in retail consumption loans, but is still maintained at a relatively low level, with a corporate loan NPL ratio of 0.20% and a retail loan NPL ratio of 1.68%.
  • The bank's Common Equity Tier-1 (CET-1) ratio is expected to be strained by the decelerated but still rapid loan growth over the next 12-18 months, with a reported CET-1 ratio of 9.32% as of 31 March 2025.
  • Bank of Ningbo's profitability, measured by return on average assets (ROAA), is expected to slightly decline over the next 12-18 months primarily due to the pressure in net interest margin (NIM), but still remains higher than most other Chinese banks.
  • The bank's reliance on market funds has decreased to 29.8% as of 31 December 2024, mainly due to a robust deposit growth during the period.
  • The bank's deposits increased by 17.2% in 2024, an exceptional growth among rated Chinese banks.

Statistics:

  • Bank of Ningbo's loan growth rate: 17.8% in 2024, 19.8% in 2023.
  • Non-performing loan (NPL) ratio: 1.68% (retail loans), 0.20% (corporate loans).
  • Common Equity Tier-1 (CET-1) ratio: 9.32% (as of 31 March 2025).
  • Return on average assets (ROAA): 0.93% (2024), 1.01% (2023).
  • Net interest margin (NIM): 1.86% (2024), 1.88% (2023).
  • Liquid banking assets/tangible banking assets: 50.0% (as of year-end 2024).
  • Market funds/tangible banking assets: 29.8% (as of 31 December 2024).
  • Deposit growth: 17.2% in 2024.

Sources:

  • Moody's Investors Service, "Moody's Ratings and Credit Research", 14 April 2025.
  • Moody's Investors Service, "Banks Methodology", November 2024, available at https://ratings.moodys.com/rmc-documents/432741.