Bank of Ningbo’s established regional presence supports profitability

It reportedly has a good local presence.

Bank of Ningbo is expected to maintain its good market position, thanks to its established presence in China’s high-income regions as well as adequate funding and liquidity, according to S&P Global Ratings.

The bank's geographic concentration and moderate capital adequacy, combined with asset expansion at a faster pace than the industry average temper these strengths, however.

“The bank has consistently outperformed domestic peers in terms of customer stickiness and profitability even during economic corrections in the regions where it operates,” the ratings agency said in a press release.

Bank of Ningbo reportedly has a good local presence thanks to its deep integration with the local ecosystem and agile services powered by early adoption of digital systems.

The bank's focus on cross-border settlement and foreign exchange management attracts its core customers, which are largely private small and midsize enterprises engaged in international activities.

Bank of Ningbo's status as a domestic systemically important bank (D-SIB) in China since 2021 also enhances customer stickiness and reduces funding costs, S&P added.

“We expect Bank of Ningbo to have low credit losses and a high NPA coverage ratio over the next two years. The bank's credit cost averaged 1.13% in the past five years, lower than the sector average of 1.27%,” S&P said.

Bank of Ningbo has a market share of 0.58% as of end-2024 across China; and 11.46% and 3.99% in Ningbo City and Zhejiang province, respectively.

The aforementioned strengths, combined with an above-average net interest margin (NIM), should help Bank of Ningbo outperform the sector in terms of profitability, S&P said.

“The bank's return on average assets was 1.02% and NIM was 2.05% during 2020-2024, versus the sector's 0.73% and 1.86%, respectively,” it said.