S&P revises China Merchants view to positive

S&P said it revised its outlook on China Merchants Bank Co. Ltd. and its core subsidiaries, CMB International Capital Corp. Ltd., CMB Financial Leasing Co. Ltd. and CMB International Leasing Management Ltd. to positive from stable. At the same time, the agency affirmed the BBB+ long-term issuer credit and debt ratings on all these companies.

Further, the affirmed its BB- foreign currency long-term issue rating on the additional tier-1 non-cumulative offshore preference shares by China Merchants Bank.

“We revised the outlook to reflect our expectation that CMB could maintain its solid performance and outperform its peers over the next two years. We believe the China-based bank's earnings have good capacity to absorb our expected credit losses through the credit cycle. CMB's average earnings buffer ratio (capacity for earnings to cover normalized losses) of 0.84% over the past three years (2018-2020) supports our view. This buffer is at the high-end among similar rated peers,” S&P said in a press release.

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