Haitong Bank S.A.

Strategically important status within the Haitong group. Strengthened capital position owing to parental capital increase. Ongoing restructuring weighs on future earnings visibility. Lack of scale in highly competitive and global market. Predominantly investment banking-related revenue, which is inherently more volatile. Worse-than-peers' asset quality and high single-name concentration. S&P Global Ratings' stable outlook on Haitong Bank reflects our view that its ratings are unlikely to change over the next 12 months. Delivering on its new strategy will be difficult and, even if successful, we would not expect the bank's financial profile to significantly strengthen. We anticipate that Haitong Bank will remain loss-making over the next two years, and this weighs on our estimated risk-adjusted capital (RAC) ratio. We also expect that

...Outlook: Stable S&P Global Ratings' stable outlook on Haitong Bank reflects our view that its ratings are unlikely to change over the next 12 months. Delivering on its new strategy will be difficult and, even if successful, we would not expect the bank's financial profile to significantly strengthen. We anticipate that Haitong Bank will remain loss-making over the next two years, and this weighs on our estimated risk-adjusted capital (RAC) ratio. We also expect that its stock of nonperforming exposures (NPEs) will remain high, and will represent about 30% of its exposure at end-2018. We could raise the ratings if we see evidence that Haitong Bank is delivering on its strategic goals, strengthening its financial profile, and proving sustainably profitable. Alternatively, we could raise the ratings on Haitong Bank if it becomes a more important subsidiary for the group. That said, we consider the latter to be largely contingent on the new strategy proving successful. Conversely, we could...

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