S&P Global Ratings raised the outlook on 's long-term issuer credit rating to stable from negative.
The rating agency said Sept. 27 that it affirmed the bank'sA long-term and A-1 short-term issuer credit ratings. The bank's standalonecredit profile was raised to "bbb" from "bbb-."
The outlook revision was driven by the bank's improvedstandalone credit profile, which provides the bank with more buffer to mitigatethe economic risk trend in China and the possible weaker capability of thegovernment to provide support.
Agricultural Bank of China's profitability will likelyweaken over the next two years due to its narrowing net interest margin andhigher credit costs. The bank's significant exposure to China's weak ruraleconomy constrains its asset quality.
S&P may downgrade the bank's ratings if it lowers itsstandalone credit profile and China's sovereign rating. The standalone creditprofile may be lowered if S&P revises its banking industry country riskassessment on China by one category due to heightened economic risk. Anotherfactor that can contribute to a lower credit profile is if the bank'scapitalization weakens due to severe credit losses.
S&P does not expect to upgrade the bank's ratings in thenear term but it may upgrade those if there is a significant improvement in itsloan quality and its capitalization.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.