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Largest Chinese banks see liquidity coverage ratios slide in H1

Liquidity coverage ratios at about half of the 25 largest Asia-Pacific banks by assets declined year over year as of the end of June, according to an analysis by S&P Global Market Intelligence.

The ratio gauges a bank's ability to withstand a stress scenario, and is calculated as the company's stock of high-quality liquid assets as a percentage of total net cash outflows over a certain period. Under Basel III, banks have to attain a minimum liquidity coverage ratio of 80% by Jan. 1, 2017, rising to reach 100% as of Jan. 1, 2019.

Chinese lenders made up a majority of the major banks in the region reporting a year-over-year fall in the ratio as of the first half, including the four largest commercial banks, Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd.

Postal Savings Bank of China Co. Ltd. saw the biggest decline among the 25 lenders analyzed, down 49.52 percentage points to 135.42%.

At the other end of the spectrum, Japan's Norinchukin Bank saw the highest year-over-year increase in the ratio, up 55.10 percentage points to 477.40%, which is also the highest ratio among the companies sampled.

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