BIZCHINA / Top Biz News
Outlook of China's banking sector
(Xinhuanet)
Updated: 2006-07-25 15:08
Moody's Investors Service says it continues to hold a stable to positive
outlook for China's banking sector as its competitive and regulatory
environment undergoes increasing change.
"Moody's earlier revised the deposit and senior bond ratings of 6 large
banks to positive following similar action on China's sovereign rating
and country deposit and bond ceilings," said May Yan, Moody's vice
president and the author of the rating agency's latest annual outlook on
the Chinese banking sector.
The six banks are China Development Bank, Export-Import Bank of China,
Industrial and Commercial Bank of China, Bank of China, China
Construction Bank and Agricultural Bank of China.
"The positive outlooks reflect the strong government support which
Moody's expects for the policy banks and big banks. However, the degree
of support accorded to other banks is likely to differ," she added.
However, the sector's recently improved financial situations have not
been tested by any downturn, she said.
The new report, entitled "Reform and Transformation in an Increasingly
Liberalized and Competitive Environment," covers a broad range of topics
-- the economic and regulatory outlooks, government support, recent
banking sector trends, reform, loan growth, profitability, performances
by each banking sector, the role of foreign banks and new businesses.
The weighted average for Moody's universe of Chinese banks is A3 for
foreign currency deposit and bond ratings, and E+ for bank financial
strength ratings.
She said reform of the large banks is on track, while some shareholding
banks have introduced strategic investors and are poised for overseas
listings. Moreover, similar reforms have spread to city commercial banks,
rural banks and credit coops, while reforms and regulatory initiatives to
strengthen operations and lower systemic risk are apparent, she added.
On the closely watched WTO-mandated opening of the Chinese banking
sector, the report says the impact will be gradual and will not cause an
immediate system collapse. Foreign banks are likely to target high-end
retail and multinational corporate in the more affluent coastal regions,
and are unlikely to have any plans to replicate the broad network and
clientele of the Chinese banks.
(For more biz stories, please visit Industry Updates)
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