CITIC Group's solid risk management will offset the impact of weak profitability on its capital for the next two years, S&P Global Ratings said in a note.
The rating agency forecasts the financial conglomerate's risk-adjusted capital ratio to be more than 5% in the said period as it practices modest growth appetite under narrower margins.
The company's annualized return on average assets fell to 0.79% in H1, S&P said, noting that reduced benchmark lending rates will further constrain the bank's profitability in the next two years.
However, securities unit CITIC Securities' (HKG:6030, SHA:600030) diversified businesses offer revenue stability while its robust risk management will aid in maintaining CITIC Group's capital buffer, S&P said.
The rating agency also expects the company's nonfinancial business segment to serve as a financial shield, with leverage remaining between 3.5x and 4x, as the specialty steel unit fares better than its peers under weak demand.
Ample risk management from CITIC Group and flagship subsidiary CITIC (HKG:0267) will support liquidity buffers despite a slight rise in debt to aid in growth.
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