Cash Injection to Boost Chinese Megabanks' Capital Position, S&P Says

MT Newswires Live03-10

Chinese megabanks will have the opportunity to lend more while improving their capitalization following a cash injection from the government, S&P Global Ratings said in a Tuesday release.

The group, which includes China's six largest banks, has faced greater interest margin pressure compared to peers due to their role in policy-favored lending and economic growth, S&P said.

The 300 billion yuan cash boost from the state also supports the banks amid increased capital requirements due to their status as global systemically important banks.

The capital addition will anchor the megabanks' capital buffers amid profit constraints, easing some burden from dampened internal capital generation, credit analyst Xi Cheng said.

After the recapitalization of four of the six banks in 2025, Fitch believes the remaining two, Industrial and Commercial Bank of China (HKG:1398, SHA:601398) and Agricultural Bank of China (HKG:1288, SHA:601288), will receive the cash support this year.

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