Chongqing Rural Commercial Bank (CQRCB) is poised to maintain a stable financial profile over the next 12 to 18 months, with solid asset quality, robust capitalisation, healthy profitability, and ample liquidity. According to Moody’s Ratings published in June 2025, the bank is well-equipped to navigate potential challenges, receiving government support if necessary.
While CQRCB boasts a strong capital position and a solid base of retail deposits, the emergence of new nonperforming loans (NPLs) poses a risk to its asset quality. The bank faces unseasoned risks as it finances the nation’s economic transition. Still, Moody’s predicts that the bank’s asset quality won’t significantly decline in the coming months, bolstered by the substantial buffers CQRCB has cultivated. As of December 31, 2024, the bank’s loan loss reserves covered an impressive 363.4% of its NPLs, providing an additional layer of security.
The institution’s capitalisation will likely remain strong, with its Tangible Common Equity to Risk-Weighted Assets ratio expected to stay above 12%. This performance outshines many of its medium-sized peers in China, according to the ratings agency. Profitability is also on track to stabilise around the 2024 level of 0.8%, a reassuring sign for stakeholders.
While net interest margin (NIM) contraction is progressing slowly, CQRCB’s liquidity remains robust. With liquid banking assets exceeding 40% of tangible banking assets, the bank comfortably covers its market funds. Customer deposits serve as a crucial funding source, accounting for 68.2% of its total liabilities as of December 31, 2024, with retail deposits making up a whopping 85.8% of total deposits.
In this sophisticated economic landscape, CQRCB continues to showcase its resilience, much like a seasoned acrobat navigating a tightrope. The bank’s proactive strategies and substantial reserves place it in a promising position, ready to tackle whatever comes next.
How is CQRCB expected to manage its asset quality in the coming months? CQRCB is anticipated to maintain stable asset quality due to strong buffers, despite risks from new nonperforming loans arising during economic transitions.
What does Moody’s predict for CQRCB’s capitalisation and profitability? Moody’s forecasts robust capitalisation levels above 12% and stable profitability around 0.8% for the bank over the next 12-18 months.
How does CQRCB fund its operations? The bank relies heavily on customer deposits, which make up 68.2% of its total liabilities, with retail deposits comprising a substantial 85.8% of total deposits.
