July 12 (Reuters) – Core capital adequacy ratio of Agricultural Bank of China [ABC.UL] is expected to rise beyond 10 percent after collecting more than $22 billion via a dual listing later this week, Moody’s said in a report on Monday.
Funds raised via its potential record-breaking initial public offering will boost the bank’s balance sheet, which had a core capital adequacy ratio of 7.74 at the end of 2009, said Yi Zhang, vice president and senior analyst at Moody’s.
The rating agency last week upgraded AgBank’s stand-alone bank financial strength rating to D- from E+, citing pressure on the bank to improve its disclosure and increase its accountability after becoming public.
“AgBank is uniquely positioned to benefit from China’s efforts to urbanise the country and increase the income level of the rural population, because its traditional strength is a vast and unparalleled branch network in China,” Zhang said.
After the massive fundraising, Beijing-based AgBank, which has more than 320 million customers, still faces challenges in how to bank on its vast network and concerns about its non-performing loans.
“AgBank has yet to formulate and execute effective strategies to capitalise on the macro-trend toward higher rural incomes,” she said.
AgBank is scheduled to start share trade in a Shanghai debut on Thursday and a day later in Hong Kong. (Reporting by Michael Wei and Jacqueline Wong)