Chongqing Rural Commercial Bank to hold steady through 2026

But formation of new bad loans remains a risk to its asset quality.

Chongqing Rural Commercial Bank (CQRCB) is expected to maintain steady asset quality, capitalisation, profitability, and liquidity over the next 12-18 months.

The bank is also expected to receive support from the Government of China if necessary.

CQRCB boasts of a robust capital position, strong retail deposit base, and adequate liquid resources, according to Moody’s Ratings in June 2025.

However, formation of new nonperforming loans (NPLs) loans remains a risk for the bank’s asset quality due to unseasoned risks in financing the economic transition.

“We do not expect CQRCB's asset quality to deteriorate significantly over the next 12-18 months because of the strong buffers that the bank has built up,” Moody’s said, noting that the bank’s loan loss reserves covers 363.4% of the bank’s NPLs as of 31 December 2024.

Capitalisation is expected to remain robust over the next 12-18 months, with its Tangible Common Equity/ Risk-Weighted Assets above 12%. This level is higher than most medium-sized banks in China, the ratings agency said.

Profitability is likely to stabilise around the 2024 level of 0.8% over the same period.

Net interest margin (NIM) contraction is slow. Liquidity is expected to remain ample over the next 12-18 months.

The bank’s liquid banking assets exceed 40% of tangible banking assets and more than covering market funds.

Customer deposits are the bank's primary funding source, accounting for 68.2% of its total liabilities as of 31 December 2024. Retail deposits accounted for 85.8% of total deposits, Moody’s said.