ADB maintains strong capital as lending and leverage rise

It is expected to release $10.3b in climate financing to its sovereign borrowers.

Asian Development Bank (ADB) is expected to remain well-capitalised as it looks to boost climate financing.

The regional development bank has a leverage approaching nearly 300%, compared to just about 260% in 2020. This reflects increased lending, which is expected to continue over the coming years, says Moody’s Ratings in a July 2025 ratings commentary.

“We expect ADB's leverage ratio to continue increasing as it raises lending to enhance its development impact in line with shareholders' demands, but remain in line with similarly-rated peers as they would also be stepping up their lending,” Moody’s said.

ADB's increasing use of credit protection instruments and continued prudent risk management will mitigate rising leverage, it added.

As of May 2025, ADB has secured $2.28b in first-loss guarantees from highly-rated shareholders under its IF-CAP programme, providing very strong credit protection.

By leveraging the guarantees 4.5 times, ADB will release about $10.3b of dedicated climate financing for its sovereign borrowers.

“The credit quality of ADB's loan portfolio also benefits from good diversification across countries and sectors, further helped by several exposure exchange agreements with peer MDBs,” Moody’s said.

ADB benefits from its preferred creditor status in its sovereign lending, which accounts for about 96% of the bank's total loan portfolio.

ADB’s nonperforming asset ratio was at 0.4% in 2024, and Moody’s does not expect ADB's asset performance to deteriorate materially.

Liquidity and funding are assessed to be “very strong” underpinned by its well-established access to the funding market, diversified investor base, as well as its ample liquidity buffers, the ratings agency added.