China Bank gets credit rating upgrade

Capital Intelligence Ltd., a Cyprus-based credit rating agency specializing in emerging markets worldwide, has upgraded its outlook on China Banking Corp. (China Bank) from negative to stable, the bank’s second rating upgrade in two years.  

Capital Intelligence presently rates over 340 financial institutions and corporates in 38 countries, focusing on emerging markets including the Middle East, the Mediterranean region, North and South Africa, Central and Eastern Europe, South Asia, Southeast Asia and the Far East.  Capital Intelligence said China Bank’s rating upgrade was due to the bank’s “good asset quality with a high loan-loss coverage ratio, comfortable liquidity and high profitability.”  

It further added that China Bank’s capital adequacy ratio (CAR) remains solid following the adoption of the international Basel II standards. 

The bank’s CAR stood at 23.68 percent, well over the minimum 10 percent required by the Bangko Sentral ng Pilipinas (BSP), and the eight-percent standard set under Basel II. 

Capital Intelligence also noted in its report China Bank’s aggressive branch expansion. 

In June last year, the Sy-controlled commercial bank acquired the Manila Banking Corp., a thrift and savings bank with a branch network of 27. 

China Bank is poised to open 30 more branches this year which Capital Intelligence said would lead to a profit pick-up due to higher growth with the additional branches.

Likewise, the upgrade was also hinged on China Bank’s expansion into new businesses. 

It has formed a joint venture company with Canada’s Manulife Financial to practice bancasssurance, which is expected to contribute significantly to its fee-based income. Manulife is ranked among the top five life insurers in the Philippines.