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Banks (Finance)

Moody's Affirms China Everbright Bank's Long-Term/Short-Term Local and Foreign Currency Deposit Ratings

Strategic Insights

— 2 min read

Moody's Ratings has affirmed China Everbright Bank Company Limited's long-term/short-term local and foreign currency deposit ratings of Baa2/P-2, reflecting the bank's steady asset quality, capitalization, profitability, and liquidity over the next 12-18 months. The stable outlook on the bank's long-term deposit ratings is supported by the Chinese government's continued support for the bank. The affirmation of CEB's ratings and assessments also considers the bank's increased capital position, adequate liquid resources, and steady growth strategy.

Key Takeaways:

  • China Everbright Bank Company Limited's long-term/short-term local and foreign currency deposit ratings of Baa2/P-2 have been affirmed by Moody's Ratings, with a stable outlook.
  • The bank's ba2 BCA reflects its increased capital position and adequate liquid resources, against its relatively high asset risk due to China's economic transition and rising reliance on market funding.
  • Formation of new nonperforming loans remains a risk to CEB's asset quality, but the bank's strategy of steady growth and adequate buffers is expected to mitigate this risk.
  • Loan loss reserves covered 174.4% of the bank's NPLs as of 31 March 2025, and the NPL ratio remained stable over the past four years at 1.25%.
  • CEB's Common Equity Tier 1 capital (CET1) ratio increased to 9.82% as of 31 December 2024 from 9.18% as of 31 December 2023.
  • The bank's profitability, measured by return on average asset (ROAA), is likely to stabilize around the 2024 level of 0.6% over the next 12-18 months.
  • CEB's market funding has increased in recent years, but it is expected to be adequately covered by its liquid banking assets over the next 12-18 months.
  • The bank's rating is based on China's Moderate+ Banking System Macro Profile, and the Adjusted BCA is the same as its BCA, which reflects no affiliate support.
  • China does not have an operational resolution regime for banks, and Moody's applies a basic Loss Given Failure approach in rating CEB's long-term deposits and debt securities.
  • The bank's long-term CRRs and CRA, before government support, are positioned one notch above the Adjusted BCA, reflecting the bank's probability of default on counterparty obligations.

Statistics:

  • China Everbright Bank Company Limited's long-term/short-term local and foreign currency deposit ratings: Baa2/P-2.
  • Bank's ba2 BCA: reflects increased capital position and adequate liquid resources, against relatively high asset risk.
  • Loan loss reserves: 174.4% of NPLs as of 31 March 2025.
  • NPL ratio: 1.25% over the past four years.
  • Common Equity Tier 1 capital (CET1) ratio: 9.82% as of 31 December 2024.
  • Return on average asset (ROAA): 0.6% in 2024.
  • Market funding: 71.3% of total revenues in 2024.
  • Liquid banking assets: mainly cash and balances with the central bank, marketable securities, and interbank assets.

Sources:

  • Moody's Ratings, "Affirmation of China Everbright Bank Company Limited", 2025.
  • Moody's Banks methodology, published in November 2024, available at https://ratings.moodys.com/rmc-documents/432741.
  • https://ratings.moodys.com for a copy of the Rating Methodologies page.

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