Moody's assigned first-time credit ratings and assessments to China Banking Corp., with a stable outlook.
The rating agency said it assigned the bank long- and short-term local- and foreign- currency deposit and issuer ratings of Baa2 and P-2, respectively. Further, the Philippines-based bank was assigned a baseline credit assessment and adjusted baseline credit assessment of "baa3" and long- and short-term counterparty risk assessments of Baa2(cr)/P-2(cr).
China Banking's ratings reflect a high likelihood of government support, its relationships with Chinese-Filipino businesses, strong capitalization, stable asset quality and support from key shareholders, the rating agency said. The bank's above-industry loan growth, high single borrower concentration and modest funding profile balance the strengths, Moody's noted.
An upward or downward action on China Banking's baseline credit assessment would likely lead to a similar action on the bank's ratings.
The bank's baseline credit assessment could be upgraded if it keeps nonperforming assets low, diversifies its funding sources and cuts dependence on high-cost corporate deposits. A decline in its concentration risk to large borrowers may also lead to an upgrade.
Conversely, an increase in the bank's risk profile, rise in nonperforming assets and concentration risk to large borrowers may lead to a downgrade. Moody's may also downgrade the bank's ratings if it faces significant refinancing risks or liquidity issues or the macro profile for the Philippines is lowered.