HONG KONG, 25 August 2025. CSPI Ratings has affirmed China Merchants Bank Co., Ltd.’s (CMB or the Bank) global-scale long-term issuer credit rating (LTICR) of ‘A+’ and the short-term issuer credit rating (STICR) of ‘A-1’. The Outlook is Stable.
The Bank’s LTICR incorporates a standalone credit profile (SACP) of ‘a-’, which considers its strengthened capital profile, robust retail franchise, strong funding and liquidity, outperforming profitability, and above-average asset quality It also takes into account the Bank’s susceptibility to market volatility. The ratings also incorporate our external support analysis of the Bank’s systemic importance and the Chinese government’s strong willingness to extend extraordinary support in times of need.
The Stable Outlook reflects our view that CMB’s resilient internal capital generation and solid loss-absorption buffer will help maintain a healthy asset quality profile amid the market challenges.
We would consider lowering the Bank’s rating if CMB’s capital and provision buffer weaken sharply as a result of a significant deterioration in asset quality or if the possibility of government support noticeably weakens.
We would consider raising the Bank’s rating if the CMB’s profitability shows substantial enhancements or if the government’s willingness to support further strengthens.
KEY RATING RATIONALE
Credit Strengths
Strengthened capitalization: We expect CMB’s capitalization to be robust, supported by its resilient earnings generation and abundant capital replenishment channels. CMB has continuously enhanced its capital profile in recent years, accumulating a healthy loss-absorption buffer against unexpected volatilities and keeping its capitalization at the highest level among joint-stock banks. Due to its profit retention through satisfying profitability and a higher proportion of low-risk weighted business and the application of New Capital Rules during 2024, CMB reported a common equity tier 1 (CET1) ratio of 14.86%, a tier 1 capital ratio of 17.48%, and a total capital adequacy ratio of 19.05% as at end of 2024.
Robust retail franchise: We believe that CMB continues to enjoy the competitive edge in retail banking businesses, considering its solid funding base, advanced retail banking technology, and established wealth management business. As the largest joint-stock bank in China, CMB’s service networks are widely distributed and mainly concentrated in developed regions of China. At the end of 2024, CMB had 210 million retail customers, and the balance of assets under management (AUM) from retail customers was RMB14.93 trillion. CMB’s strong retail operation also supports stable low-cost deposits, lower earnings volatility than peers, and higher-quality loan assets.
Strong funding and liquidity: We anticipate that CMB will maintain its good funding structure, thanks to its fast-growing and vast retail deposit base in China. As of the end of 2024, customer deposits accounted for 83.31% of its total liabilities, which was significantly higher than the joint-stock banks. The customer deposits increased by 11.54% in 2024, following a deposit growth of 8.2% in 2023, 18.9% in 2022, 12.7% in 2021, and 16.2% in 2020. Among its customer deposits, retail deposits accounted for 44.34%, totaling RMB4.03 trillion, up by 15.40%. CMB also has adequate liquidity, with a liquidity coverage ratio of 173.85% and a net stable funding ratio of 133.15%, both of which were much higher than the minimum regulatory requirement of 100%.
Outperforming profitability: CMB’s profitability metrics will outperform its peers in our projection over the next 12-18 months, underpinned by its well-above Net Interest Margin (NIM) and effective cost control. Albeit CMB’s returns on average assets (ROAA) and returns on average shareholder’s equity (ROAE) slightly decreased to 1.28% and 14.49% from 1.39% and 16.22% in 2023, respectively, the profitability metrics are compared favorably to the sector average of 0.63% and 8.10% at the end of 2024. Specifically, in 2024, affected by the decline in LPR and deposit costs, CMB's NIM decreased from 2.15% in 2023 to 1.98%, but it still remains better than its peers. CMB continued to optimize its expense management and improve operational efficiency, with the cost-to-income ratio declining from 32.96% the previous year to 31.89%. Coupled with a reduced provision for asset impairment losses, this contributed to a 1.05% increase in net profit compared to 2023. As CMB endeavors to grow retail loans of higher yield and secure demand deposits of lower cost, we forecast that CMB’s NIM will remain largely stable with a minor decrease in the face of industry-wide margin compression.
Above-average asset quality with high provision: CMB’s asset quality will remain stable in our projection for 2025-2027, in view of its prudent asset risk management, active non-performing loan resolution, and strict asset classification. Albeit the balance of non-performing loans increased due to the risks of certain high-debt real estate customers and retail banking businesses, the bank’s overall non-performing loan (NPL) ratio remained at 0.95% at the end of 2024, compared favorably to the sector average of 1.50%, which was also the lowest among joint-stock banks. The provision coverages for total loans and NPLs were 3.92% and 411.98% at the end of 2024, which were much higher than the industry averages of 3.18% and 211.19%, respectively, and both were in the leading position among peers.
In particular, in 2024, CMB's NPL ratio for real estate decreased from 5.26% in 2023 to 4.94%. At the same time, the bank's exposure to the real estate sector declined from RMB326.67 billion at the end of 2023 to RMB318.55 billion at the end of 2024, with the proportion of total loans dropping from 5.02% to 4.62%. We also note that over 85% of property development loans were located in the urban areas of economically developed regions. Hence, we believe the liquidity of real estate enterprises will be mitigated with government support, and such concerns with real estate exposure will be largely containable.
Strong government support: We believe that the government will have a strong willingness to support CMB in times of need, given the Bank’s domestically systemic importance. As the 7th largest commercial bank by assets overall, CMB was officially designated as a D-SIB from 2021. We believe it is highly likely that it would have significant impacts on the financial system and the real economy should it fail.
Credit Weaknesses
Vulnerability to economic volatility: We believe CMB will continue to be sensitive to a high degree of market volatility as the largest joint-stock bank in China. CMB’s 2024 corporate loan portfolio tracks closely with that of the broader market, with large exposure to manufacturing, transportation, and real estate each representing 9.72%, 7.87%, and 4.62% of total loans, respectively. We also have concerns over the Bank’s potential NPL exposure. In particular, we note that around 35.06% of the Bank’s SMLs migrated to the NPL category in 2024.
The complex and challenging international and domestic situation is likely to continue to put pressure on CMB’s asset quality and earnings. The intensified international geopolitical conflicts, macro-policy uncertainty in developed economies may increase the volatility of global financial markets. Domestically, the slow recovery of the domestic macroeconomy, the mounting pressure in the property and LGFV sectors, and the tightening of financial regulation have led to the credit risk exposure in certain regions and industries.
Note: The ratings mentioned in this press release are unsolicited ratings.
ANALYSTS CONTACT
Primary Analyst
Tingting Qiao
+852 3615 8339
tingting.qiao@cspi-ratings.com
Secondary Analyst
Sherlock Liang
+86 755 2348 3690
sherlock.liang@cspi-ratings.com
Committee Chair
Jameson Zuo
+852 3615 8341
MEDIA CONTACT
Rating Services Contact
commercial@cspi-ratings.com
Date of Relevant Rating Committee: 20 August 2025
Additional information is available on www.cspi-ratings.com
Related Criteria
Global Banking Rating Criteria (16 August 2019)
Government-Related Entities Rating Criteria (31 August 2018)
Rating Symbols and Definitions (7 May 2018)
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