Fitch upgrades viability ratings of three China banks, affirms IDRs of five

Fitch upgrades the viability ratings of CCB, ICBC and BOC to bb+ from bb

Fitch Ratings upgraded the viability ratings of China Construction Bank Corp (CCB), Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC) to bb+ from bb. The agency affirmed the long-term foreign-currency issuer default ratings (IDR) of the three large state-owned commercial banks at A, as well as those of Agricultural Bank of China (ABC) and Bank of Communications (BOCOM). The outlooks are stable.

The viability rating upgrades for CCB and ICBC are underpinned by consistently high capital levels and loss absorption buffers compared with Chinese peers, which are commensurate with the banks' stronger asset quality and lower risk appetite. The upgrade of BOC's viability rating reflects the stability of its profile throughout a challenging environment; geographic diversification with a lower risk appetite overseas; and adequate asset quality has cushioned it against asset quality deterioration in its domestic loan book. BOC's franchise puts it in a better position than peers to harness opportunities outside of mainland China. The IDRs of all five banks are based on state support and are at the banks' support rating floors, reflecting an extremely high probability of extraordinary support from the central government in the event of stress.

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17 May 2018


Capital Markets

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