Moody's Affirms Metropolitan Bank (China) Ltd.'s Deposit Ratings with Stable Outlook

Strategic Insights -

Metropolitan Bank (China) Ltd., also known as MetroBank China, is a Chinese bank with a long history dating back to 2010. Moody's Investors Service has recently affirmed the bank's deposit ratings, citing stable asset quality, robust capitalization, and sufficient liquidity. However, the bank's weak profitability and small deposit base are tempered by its moderate asset risk and robust capitalization.

Key Takeaways:

  • Moody's has affirmed MetroBank China's Baa2/P-2 long-term/short-term local and foreign currency deposit ratings, with a stable outlook.
  • The bank's ba1 Baseline Credit Assessment (BCA) reflects its moderate asset risk, robust capitalization, and sufficient liquidity.
  • MetroBank China's asset quality will continue to be challenged by the unseasoned risks from its rapid loan growth, with a nonperforming loan (NPL) ratio of 0.17% as of 31 December 2024.
  • The bank's loan book grew by 18.1% in 2024, following a growth of 17.9% in 2023, which is high among rated banks.
  • MetroBank China's CET-1 ratio will remain robust over the next 12-18 months, increasing to 15.05% at the end of 2024 from 14.68% at the end of 2023.
  • The bank's profitability will remain weak, strained by the narrowing net interest margin (NIM) and high cost-to-income ratio, with a return on average assets (ROAA) of 0.33% in 2024.
  • MetroBank China's funding profile is modest, given its small deposit franchise and high reliance on corporate deposits, with a market funds/tangible banking assets of 13.2% as of 31 December 2024.
  • The bank's liquid assets made up 46.6% of its tangible banking assets as of the end of 2024, with around 19% of these liquid assets being corporate bonds.

Statistics:

  • MetroBank China's loan growth was 18.1% in 2024, following a growth of 17.9% in 2023.
  • The bank's nonperforming loan (NPL) ratio was 0.17% as of 31 December 2024.
  • MetroBank China's CET-1 ratio increased to 15.05% at the end of 2024 from 14.68% at the end of 2023.
  • The bank's return on average assets (ROAA) was 0.33% in 2024.
  • MetroBank China's market funds/tangible banking assets was 13.2% as of 31 December 2024.
  • The bank's liquid assets made up 46.6% of its tangible banking assets as of the end of 2024.

Sources:

  • Moody's Investors Service, "Metropolitan Bank (China) Ltd.," 14 February 2025.
  • Moody's Investors Service, "Banks," November 2024, available at https://ratings.moodys.com/rmc-documents/432741.