S&P lifts Agriculture Bank view, stand-alone rating

S&P said it revised the outlook on the long-term issuer credit rating on Agricultural Bank of China Ltd. to stable from negative.

The agency also said it affirmed the bank’s A long-term and A-1 short-term issuer credit ratings, along with its cnAA+ long-term and cnA-1 short-term Greater China regional scale ratings.

The agency also said it affirmed all of the issue ratings on debt that the bank has issued, guaranteed or supports through letters of credit.

S&P said the company’s stand-alone credit profile has improved, which provides the bank additional buffer to mitigate the negative economic risk trends in China and potentially weaker capability of the government to provide extraordinary support.

The bank also is likely to maintain its resilient capitalization over the next 12 to 24 months, the agency said.

This has led to an upgrade of the bank’s stand-alone rating to BBB from BBB-, S&P said.

But the bank’s profitability is expected to weaken over the next two years due to the bank's narrowing net interest margin and higher credit costs, the agency added. This trend is similar across banks in China, S&P said.

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