Moody’s: Postal Savings Bank of China deposits A2

Moody's Investors Service said it assigned the following to Postal Savings Bank of China Co., Ltd.: A2 long-term local- and foreign-currency deposit ratings with a positive outlook; P-1 short-term local- and foreign-currency deposit ratings; baa3 baseline credit assessment (BCA) and adjusted BCA; and A2(cr)/P-1(cr) counterparty risk assessment.

The outlook is positive and reflects an improving financial performance by the bank, as reported in the first half of 2017, and the potential for the bank to strengthen its capital following its planned A-share listing, the agency explained.

Moody’s said the A2 long-term deposit ratings incorporate a BCA of baa3 and a four-notch uplift based on the agency’s assumption of a very high level of government support for Postal Savings Bank in times of need.

The BCA of baa3 reflects the bank's: (a) Strong funding profile, given its extensive branch network and low reliance on market funding; (b) relatively good asset quality as measured by its low non-performing loan ratio; (c) weaker-than-peer capital adequacy; and (d) relatively modest profitability compared to other large Chinese commercial banks.

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