
BEIJING, Jan. 19 -- Moody's said in a report on Monday that overall credit profile of Chinese banks would be largely stable over the next 12 to 18 months.
The outlook "reflects that the developments in monetary policy,
financial supervision and market reform will help stabilize banks' operating environment, liquidity and capital, but could also pressure profitability, asset quality and support assumptions," said Christine Kuo, Senior Credit Officer at Moody's.
The rating agency said recent shifts towards more accommodative monetary and credit policies would help arrest the decelerating trend in the credit cycle and maintain broad credit growth in the range of 15 percent to 20 percent. Bank credit was estimated to grow in the range of 10 percent to 15 percent.
The banks' funding and liquidity positions should improve, given the central bank's stance on liquidity, Moody's said.
However, according to the rating agency, profitability would come under pressure because of narrowing net interest margins, deregulation, and low growth in fee income as a result of tighter supervision of wealth management and regulatory limits on fees for banking services.
On the banks' capital positions, Moody's expected slower internal capital generation on lower lending profitability and higher credit costs, but most banks will maintain capital ratios by managing credit growth.
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