Fitch Ratings has changed its outlook for six major Chinese banks from Negative to Stable on Tuesday, signaling a more optimistic view of their future performance. The revision includes five state-owned lenders and China Merchants Bank (CMB), reflecting confidence in continued government support.
Despite China's recent sovereign rating downgrade, the decision suggests no immediate risk to the banks' ability to meet financial obligations. The five state banks are: Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Bank of China (BOC), Agricultural Bank of China (ABC) and Bank of Communications (BOCOM).
"We believe the government still retains financial flexibility to support the financial sector including towards the six banks, even amid higher deficits and rising debt. The required capital under a potential recapitalization scenario has fallen, thanks to systemwide resolution of non-performing assets and more productive credit growth," the rating agency said.
