S&P Global (China) Ratings today said that the initial public offering on the A-share market of Shanghai Rural Commercial Bank Co., Ltd. (SRCB; AAspc-/stable) has improved its capital supplement channel and further consolidated its position as a regional bank with the highest credit quality in China.
SRCB's A-share market listing further enhances its capital strength. It raised about 8.6 billion RMB in the IPO which elevated its capital adequacy ratios. Before the IPO, the bank's tier-1 capital adequacy ratio and total capital adequacy ratio were 12.05% and 14.28% respectively by the end of June 2021, comfortably above the minimum regulatory requirements.
After the listing, state-owned enterprises of Shanghai continue to hold the majority of its equity. We believe that the bank will remain highly important for Shanghai municipal government. With the increased capital base, the bank will play a greater role in serving local small and micro businesses and the rural sector.
The asset quality of SRCB is significantly better than the industry average, and its strong reserve buffer ensures the high quality of its capital. By the end of 2020, its non-performing loan ratio was 0.99%, and its special-mention loan ratio was 0.76%, 0.85% and 1.81% lower than the industry average respectively; its reserve coverage ratio was 419%, far higher than the average industry level of 184%.
In the first half of 2021, SRCB performed well. As of the end of June 2021, its total assets were 1.1 trillion RMB, up by 4% from the end of 2020. In the first half of the year, the bank realized an operating revenue of 12 billion RMB, and a net income attributable to parent of 5.1 billion RMB, representing a YoY increase of 7% and 18% respectively, showing robust development potential in the post-COVID era.
This bulletin does not constitute a rating action.