Moody’s retains China Bank’s Baa2 rating

Published December 6, 2020, 6:30 AM

by James A. Loyola

Moody’s Investors Service has retained China Banking Corporation’s (China Bank) investment grade long-term foreign currency counterparty risk and long-term foreign currency deposit ratings.

In a statement, the bank said Moody’s assigned it a Baa2 rating with stable outlook. The credit rating is the same level as the Philippine sovereign rating. 

“We are very pleased to have maintained the investment grade rating from Moody’s, which confirms the Bank’s solid fundamentals and resilience,” said China Bank President William C. Whang.

He added that, “We are proud that despite the challenging economic environment in 2020, we are able to continue to serve and support our customers and face the difficulties from a position of strength.”

In its November 27, 2020 report, Moody’s noted that China Bank’s ratings are underpinned by stable capitalization and profitability, as well as strong support from key shareholders.

The rating action also took into account Moody’s expectation of risks to the Bank’s asset quality from the economic shock caused by the coronavirus. 

The 100-year old bank continues to be profitable, well capitalized, and liquid. China Bank’s net income from January to September 2020 increased by 23% to P8.2 billion.

Total capital rose by 9 percent to P101 billion, with CET 1 ratio of 13.08 percent and total CAR of 13.98 percent, both well above regulatory requirements.

The Bank hit its year-end target of P1 trillion in total assets by September 30, with P595 billion in loans and P827 billion in deposits.

Funding is China Bank’s strength as its deposit base is supported by its extensive branch network and strong relationships Chinese Filipino corporates, and small and medium sized enterprise (SME) business owners. China Bank recently raised P15 billion from its second offering of peso fixed-rate bonds, issued out of the Bank’s P45 billion bond and commercial paper program.