Moody’s acts on nine Chinese banks

Moody's Investors Service said it took the following rating actions on nine Chinese banks:

• China Guangfa Bank Co., Ltd.: Deposit rating placed on review for upgrade

• China Merchants Bank Co., Ltd.: Outlook changed to stable from negative;

• Ping An Bank Co. Ltd: Outlook changed to stable from negative;

• Industrial Bank Co. Ltd.: Long-/short-term (foreign currency) senior unsecured medium-term notes downgraded to provisional Baa3/provisional P-3 from provisional Baa2/provisional P-2, long-term deposit ratings downgraded to Baa3 from Baa2, short-term deposit ratings downgraded to P-3 from P-2, outlook changed to stable from negative;

• China CITIC Bank Corp. Ltd.: Long-term deposit ratings downgraded to Baa2 from Baa1, outlook changed to stable from negative;

• Shanghai Pudong Development Bank Co., Ltd.: Long-term deposit ratings downgraded to Baa2 from Baa1, outlook changed to stable from negative;

• Bank of Shanghai Co. Ltd.: Long-term issuer rating downgraded to Baa3 from Baa2, short-term issuer rating downgraded to P-3 from P-2, long-term deposit rating downgraded to Baa3 from Baa2, short-term deposit rating downgraded to P-3 from P-2, outlook changed to stable from negative;

• Bank of Ningbo Co., Ltd.: Long-term deposit ratings downgraded to Baa3 from Baa2, short-term deposit ratings downgraded to P-3 from P-2, outlook changed to stable from negative; and

• China Everbright Bank Co. Ltd.: Ratings affirmed, outlook maintained at negative.

According to Moody’s, common to all these actions are increasing pressure on these banks' standalone creditworthiness owing to growing risks in their funding profiles, and increasing asset quality pressure, as reflected in their latest full-year 2015 and half-year 2016 financial results.

The assessment followed the agency’s change of China’s macro profile to "moderate" from "moderate +" in March 2016, which implied downward pressure on the standalone profiles of Chinese banks. The macro profile change reflected the continued rise in leverage in the Chinese economy from an already high level.

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