S&P Global Ratings raised its rating outlook on Shanghai Rural Commercial Bank Co. Ltd. to positive from stable.
The rating agency also affirmed the bank's long-term issuer credit rating at BBB- and its short-term issuer credit rating at A-3. The long-term and short-term China regional scale ratings on the bank were affirmed at "cnA-" and "cnA-2," respectively.
S&P said it raised the bank's rating outlook given the improving credit standing of the Shanghai municipal government, which holds a 20% stake in the bank through a financial holding platform. The improvement strengthens the government's ability to provide support to Shanghai Rural Commercial Bank, if the need arises.
S&P expects the bank to receive government support given its importance to the community and link to the government. The bank has an important role in providing banking services to small and midsize enterprises and the rural community in Shanghai.
S&P may upgrade the bank if it assesses that the creditworthiness of the Shanghai municipal government has strengthened. On the other hand, S&P may lower the outlook to stable if the creditworthiness of the government has not significantly improved, or if the bank's asset quality or earnings deteriorate.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.