CI affirms ICBC’s ratings with stable outlook – report

Capital Intelligence Ratings (CI) affirmed on Wednesday the Long-Term Foreign Currency Rating (LT FCR) and Short-Term Foreign Currency Rating (ST FCR) of Industrial and Commercial Bank of China (ICBC) at ‘A’ and ‘A1’, respectively.

Additionally, CI has affirmed ICBC’s Bank Standalone Rating (BSR) at ‘bbb-‘ and Core Financial Strength (CFS) rating at ‘bbb’. The Outlook for the LT FCR and BSR remains stable.

The stable outlook reflects CI’s assessment that the ratings are likely to remain unchanged over the next 12 months. While the operating environment presents challenges, ICBC’s strong financial position in terms of loan asset quality, liquidity, and capital positions support the maintenance of the current ratings.

The four-notch uplift of the LT FCR above the BSR is attributed to a Very High Extraordinary Support Indicator (ESL), reflecting ICBC’s majority state-ownership and Global Systemically Important Bank (G-SIB) status.

The Chinese government’s track record of supporting troubled banks and its ample resources provide further support to ICBC’s creditworthiness.

ICBC’s BSR is derived from its CFS rating and an Operating Environment Risk Anchor (OPERA) of ‘bbb-‘.

While China’s economy exhibits strengths such as high competitiveness and a strong external position, it also faces challenges like macro-financial risks, property market weaknesses, and rising external risks. These factors have contributed to a modest risk assessment for the OPERA.

Although Chinese banking institutions currently maintain satisfactory financial ratios, CI expresses concerns about the potential impact of the weak property market and financial stress in the local government financing vehicle (LGFV) sector on the overall banking sector’s vulnerability.

Attribution: Capital Intelligence Ratings report

Subediting: M. S. Salama