(Bloomberg) -- Moody's Investors Service upgraded the ratings or raised the outlook for 19 Chinese banks, citing the country's improved growth prospects and its progress in reducing financial sector risks.
Moody's upgraded by one notch the ratings of Agricultural Bank of China Ltd., Postal Savings Bank of China Co. and others, while improving the outlook to positive from stable for banks such as China Citic Bank Corp., according to a statement late Wednesday. The move followed Moody's earlier decision to change the macro profile for China to "moderate +", driven by the country's "very strong" banking country risk score, the ratings company said.
During the past year, Moody's has raised its forecast for China's gross domestic product growth in 2019 to 6.4 percent, from an earlier prediction of less than 6 percent expansion. The forecast for GDP growth this year was raised to 6.6 percent from 6.3 percent. Moody's has also noted a slowdown in China's credit growth and shadow banking activities.
Read about China's progress in curbing its shadow banking sector
Moody's said large state-owned lenders and banks with a strong retail franchise -- such as China Merchants Bank Co. -- will likely have more flexibility in dealing with tougher rules on shadow banking and interbank exposures.
One year after the launch of an unprecedented campaign to curb financial risks, China's shadow banking sector is growing at a slower pace than the nation's GDP for the first time in five years, with sales of high-yield wealth products to households stalling and short-term borrowing among financial institutions slumping.
To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward
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