Fitch: China's banks face capital pressures and structural risks

The US-based Fitch ratings published their latest review on the Chinese banking sector, underscoring key downside risks exposed to the banks.

Key Quotes:

“Fitch Ratings' outlook for the Chinese banking sector in 2017 is negative, reflecting our view that weak profitability and strong credit growth will keep capitalization under pressure.”

“High and rising leverage in the corporate sector remains a key risk facing China's banks.”

“Fitch expects NPL and 'special mention' loan ratios to continue rising in 2017.”

“Bank profitability will remain lackluster and under pressure, owing to another likely cut in the benchmark one-year lending rate and further migration of deposits toward wealth management products (WMPs).“