CITIC Bank International holds firm with solid capital and liquidity: analyst

The bank’s exposure to property development and investment in Hong Kong accounted for 13% of gross loans at the end of 2024. 

China CITIC Bank International is expected to maintain sound asset quality, strong capitalisation, and solid liquidity over the next 12 to 18 months, despite ongoing challenges from Hong Kong’s sluggish property market, according to Moody’s.

The bank’s exposure to property development and investment in Hong Kong accounted for 13% of gross loans at the end of 2024. However, these loans are viewed as low risk due to the strong profiles of borrowers and conservative loan-to-value ratios.

Exposure to mainland Chinese developers is limited, actively being reduced, and backed by increased provisioning. The impaired loan ratio improved to 2.1% in 2024, down from 2.3% the previous year.

Moody’s noted capitalisation remains solid, supported by moderate internal capital generation and controlled growth in risk-weighted assets. Liquidity also remains robust, with the liquidity coverage ratio reaching 200% in Q1 2025, well above the regulatory minimum of 100%.

The bank grew total deposits by 9% in 2024, with current and savings account deposits rising to 27% of total deposits, up from 25% a year earlier.

Profitability is expected to come under pressure in 2025 due to a narrowing net interest margin (NIM), following a decline in market interest rates.

Whilst this will weigh on earnings, the bank anticipates partial relief from increased fee and commission income. NIM slipped slightly to 1.79% in 2024.

The bank maintains a moderate reliance on wholesale funding, but its overall liquidity position is considered strong, according to the report. Its funding mix, along with steady deposit growth and high-quality liquid assets, supports its financial resilience.

CITIC Bank International also continues to depend heavily on its parent, CITIC Bank, reflecting a high level of affiliate reliance. Moody’s expects indirect support from the Chinese government through the parent to remain in place, though not for all liability classes.

Loss Given Failure analysis suggests very low to moderate loss risk across most liabilities. However, the recent redemption of US$500m in Tier 2 subordinated debt has increased potential loss severity for some instruments.