Update: China Merchants Bank Co. Ltd.

CMB's continuous investment in financial technology contributes to its business franchise. The bank invested 3.2% of its operating income in the first half of 2023 to build its digital infrastructure and information technology team. The positive rating outlook reflects our view of a one-in-three possibility that CMB may sustain its strong liquidity. We will monitor the stability of the bank's liquidity metrics (such as ratio of broad liquid assets to short-term wholesale funding) when loan demand recovers and deposit growth falls, as well as qualitative factors (such as the likelihood of depositors' flight to safety in times of stress). We could revise the outlook to stable if we consider CMB will be unable to sustain its strong liquidity. We could

...Key strengths Key risks Entrenched retail franchise with a nationwide presence. Weak household and business confidence in China, which could affect revenue growth and profitability. Sound risk management that supports better asset quality than peers'. Strains from property sector and local government financing vehicles in some regions. Likelihood of extraordinary government support, if needed....

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