Industrial and Commercial Bank of China Limited (ICBCAS)

ICBC’s current senior credit strength is considered to be in the top tier of the Chinese banking sector. The credit direction is broadly stable, but low net interest margin, credit impairment, RWA growth and the move to G-SIB bucket 3 mean that it is not in a phase of rapid improvement. The probability of a large deterioration in senior credit over a short period is low, but for subordinated instruments, TLAC and overseas branch or subsidiary-issued bonds, credit sensitivity is higher depending on instrument terms and market conditions.

This view is supported by customer deposits of more than RMB38tn, total assets of more than RMB55tn, a CET1 ratio in the 13% range, a total capital adequacy ratio in the 18% range, regulatory headroom in LCR and NSFR, government-related major shareholders, and systemic importance as a G-SIB. ICBC is an issuer linked directly not only to ordinary standalone bank financial metrics but also to the stability of China’s financial system. In this report’s analysis, support expectation is an important credit enhancement for senior debt.

At the same time, the credit view is constrained by low margins and the asset-quality mix. The aggregate NPL ratio is stable, but high NPL ratios remain in corporate real estate, cards, personal consumption, construction, and wholesale and retail. If credit impairment remains heavy while the net interest margin stays around 1.3%, capital formation through retained earnings will slow, reducing headroom to manage RWA growth and additional G-SIB requirements.