News from Fitch Ratings, the international rating agency, says that it has today upgraded Industrial & Commercial Bank of China's ("ICBC") Individual ratings to 'D/E' from 'E'. At the same time, the agency affirmed ICBC's Long-term foreign currency rating at 'BBB+' and Support rating at '2'. The rating Outlook is Stable.

Fitch views the USD15 billion government recapitalisation of ICBC, completed in April 2005, and the disposal of USD85bn (RMB705bn) in NPLs in June 2005 as positive moves, resulting in ICBC's substantially improved asset quality and enhanced capital position. At end-June 2005, ICBC reported a CAR ratio of 9.12% (tier 1: 8.07%) and an NPL ratio of 4.58% versus a high 19% end-2004.

For 2005, ICBC is targeting to establish a shareholding company and to focus on the reform of its corporate governance, human resources and risk management systems. The bank has lately signed a memorandum of understanding to sell a combined 10% stake to Goldman Sachs, Allianz Group and American Express for about USD3bn.

Fitch notes that ICBC's current robust financials are the result of one-off government aid. The agency estimates that the underlying trend of NPLs actually increased in 2004, although the bank states that this is due to a much stricter classification of overdue loans. As a result, the maintenance of current good asset quality and a higher level of capital, as well as improvement in its operating performance would be key to ICBC's rating outlook.

By People's Daily Online