On November 3, international rating agency Fitch released a rating report, upgrading the long-term foreign currency issuer default ratings of four national joint-stock commercial banks: Minsheng Bank, Guangfa Bank, Ping An Bank, and Huaxia Bank.
Specifically, Fitch upgraded Minsheng Bank's long-term foreign currency issuer default rating from "BBB-" to "BBB" with a stable outlook. At the same time, the bank's government support rating was raised from "bbb-" to "bbb", and its short-term issuer default rating was lifted from "F3" to "F2". Fitch also affirmed Minsheng Bank's viability rating at "bb-".
Fitch upgraded Guangfa Bank's long-term foreign currency issuer default rating from "BB+" to "BBB-" with a stable outlook. The bank's government support rating was also raised from "bb+" to "bbb-", and its short-term issuer default rating was lifted from "B" to "F3". Fitch additionally affirmed Guangfa Bank's viability rating at "bb-".
Fitch upgraded Ping An Bank's long-term foreign currency issuer default rating from "BB+" to "BBB-" with a stable outlook. The bank's government support rating was raised from "bb+" to "bbb-", and its short-term issuer default rating was lifted from "B" to "F3", while its viability rating was affirmed at "b+".
Fitch upgraded Huaxia Bank's long-term foreign currency issuer default rating from "BB+" to "BBB-" with a stable outlook. The bank's government support rating was raised from "bb+" to "bbb-", and its short-term issuer default rating was lifted from "B" to "F3". Fitch also affirmed Huaxia Bank's viability rating at "b+".
According to the Fitch rating report, in October this year, Fitch adjusted its operating environment score for China's banking sector from "bbb-" to "bbb" with a stable outlook. This adjustment reflects continuous structural improvements in China's banking system over the past five years, including reduced shadow banking risks, improved transparency, strengthened credit discipline, and a further refined regulatory framework. Fitch believes that China's sound external financing conditions and large, diversified economy will provide stronger financial and economic stability for the banking sector.
In addition to the improved operating environment, Fitch also considered multiple factors such as systemically important bank status, risk profile, profitability, capital levels, and funding conditions in making the above adjustments.
Xue Hongyan, a special research fellow at Suzhou Bank, believes that the most direct benefit of an issuer rating upgrade for bank operations is the improvement in credit image and financing conditions. A higher rating means greater recognition in international capital markets of the bank's debt repayment capacity and soundness, which helps banks lower financing costs for foreign currency bonds, financial bonds, and interbank business, broaden financing channels, and boost confidence among customers, counterparties, and long-term funds.
Among the four banks whose ratings were upgraded this time, Minsheng Bank, Ping An Bank, and Huaxia Bank are A-share listed banks and recently disclosed their operating results for the first three quarters.
According to the third-quarter reports, Minsheng Bank saw its net interest margin improve year-on-year in the first three quarters, with operating revenue maintaining growth. It achieved operating revenue of 110.554 billion yuan, up 1.88% year-on-year. Among this, net interest income was 79.246 billion yuan, an increase of 3.736 billion yuan or 4.95% year-on-year, mainly driven by optimized asset-liability structure that pushed the net interest margin up 5 basis points year-on-year.
In the first three quarters, Ping An Bank's business operations remained stable, with both revenue and profit growing year-on-year. It achieved operating revenue of 103.1 billion yuan, up 2.4% year-on-year, and net profit attributable to shareholders of 39.186 billion yuan, up 2.2% year-on-year.
In the first three quarters, Huaxia Bank achieved operating revenue of 76.882 billion yuan, up 18.50% year-on-year, ranking among the top in growth rate among the 42 A-share listed banks.
At the end of October, Fitch affirmed the long-term foreign currency issuer default ratings of six major state-owned banks—ICBC, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China—at "A" with a stable outlook, while upgrading the viability ratings of these six major banks.
During the year, Fitch also successively upgraded the ratings of several national joint-stock banks. In April, Fitch upgraded China CITIC Bank's long-term foreign currency issuer default rating from "BBB+" to "A-" with a stable outlook. In July, Fitch again adjusted the ratings of several joint-stock banks in a concentrated manner, with Shanghai Pudong Development Bank and Industrial Bank both receiving upgrades to their long-term issuer default ratings and viability ratings. At the same time, the viability ratings of China Merchants Bank, China CITIC Bank, and China Everbright Bank were also upgraded.
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