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S&P Global (China) Ratings Released the First Credit Rating Report on Major State-owned Banks in China: PSBC Assigned an “AAAspc” Rating

Date: 2020-01-03

On January 3, S&P Global (China) Ratings released a credit rating report which assigned its “AAAspc” rating to Postal Savings Bank of China (PSBC), the highest issuer credit rating, with a stable outlook. It’s the first time that PSBC was assigned an issuer credit rating by S&P Global (China) Ratings, being the first major state-owned bank in China to receive an issuer credit rating from S&P Global (China) Ratings.

A wholly-owned subsidiary of S&P Global, S&P Global (China) Ratings obtained the rating license in the Chinese interbank market in January 2019. S&P Global (China) Ratings is the first and also currently the only fully foreign-owned credit rating agency in the domestic Chinese market that offers independent credit ratings.

S&P Global (China) Ratings stated that as one of the six major state-owned commercial banks in China, PSBC was a leading large retail bank in China and played a critical role in the field of financial services in rural and county areas. As at the end of June 2019, PSBC ranked 5th among Chinese commercial banks in terms of total assets and total deposits, and 4th in terms of retail deposits. PSBC outlets covered 99% county areas in China, its retail accounts took up about 40% of the total population in China, and its asset quality was superior over the industry average. In the meantime, thanks to its outlet advantage, PSBC built up a solid personal deposit base and relied little on wholesale funding. The solid retail deposit base also enabled PSBC to have a liability structure that was much more stable than the industry average. S&P Global (China) Ratings considered that PSBC had sufficient capital and healthy profitability and its recent A-Share IPO had further replenished its capital.

S&P Global (China) Ratings thought that given PSBC’s equity structure of a state-owned commercial bank and its essential role in the Chinese financial industry, the Bank was of vital importance to the government.

The outlook of the rating by S&P Global (China) Ratings to PSBC was stable. S&P Global (China) Ratings also believed that in the next two years or more, business development and financial strengthen of PSBC would maintain stable and its importance to the government would remain unchanged.

Positioned to serving Sannong customers, urban and rural residents and small and medium-sized businesses, PSBC is distinctive with strong retail characteristics, and its operating performance continued to improve. Data show that in the first three quarters of 2019, PSBC recorded a net profit of RMB54,344 million, up by 16.33% year on year. In the meantime, NPL ratio of PSBC was only 0.83%, less than half of the industry average; allowance to NPLs ratio reached 391.10%, twice the industry average. According to the projection disclosed in the PSBC A-share prospectus on the performance of the full year, the Bank’s net profit attributable to ordinary shareholders in 2019 would be RMB58,180 million to RMB59,226 million, up by 16.55% to 18.64% year on year.

On December 10, 2019, PSBC was successfully listed on the A-share market, marking the conclusion of listing of major state-owned banks on both A-share and H-share markets. Experts said that the move would help PSBC further improve its corporate governance system, establish a long-acting capital replenishment mechanism, and enhance its capacity on risk management, in order to provide strong support for future development and improve services to the real economy.

In 2019, on the list of “Top 1000 World Banks” by The Banker, a British magazine, PSBC ranked 22nd in terms of tier-1 capita. On the main list of “Top 100 Hong Kong Listed Companies” by comprehensive strength, PSBC ranked 20th. PSBC was assigned A+ and A1 ratings, the same as China’s sovereignty ratings, by Fitch and Moody’s respectively, and an A rating by S&P.

Extracted from Xinhuanet

January 3, 2020