Moody’s Investors Services lifted its outlook for Ping An Group’s lending vehicle in anticipation of improvements to asset quality.
In a report issued on 16 August Moody’s said that it had changed its outlook for Ping An Bank to “positive” from “stable,” while maintaining a “stable” outlook for Ping An Overseas Holdings.
Moody’s said that in addition to the solid health of the Chinese banking system, the reasons for upgrading its Ping An Bank outlook included:
- The bank’s strategic and operational coordination with the group lifting growth prospects, while there is also the possibility of a high level of support from affiliates.
- Stable pre-provisions profitability and sliding credit costs raising hopes for a restoration in profitability.
- Ongoing improvements in the quality of Ping An Bank’s retail operations, following growth in retail deposits and comprehensive financial products.
Moody’s anticipates a rebound in Ping An Bank’s asset quality over the next 12 – 18 months, via the adoption of effective measures to dissolve historic non-performing loans (NPL), ongoing improvements to risk assessment and China’s continued economic recovery.
As of 31 March 2021 Ping An Bank’s NPL ratio was 1.1%, while its provisions coverage ratio was 245.16%, both of which mark improvements compared to the end of 2018.