Industrial Bank outlook steady as profitability holds near 2024 levels

NIM narrowing is expected to slow in the next 12-18 months.

Industrial Bank Co., Ltd.’s is expected to maintain stable asset quality, capitalisation, profitability, and liquidity over the next 12-18 months, said Moody’s Ratings.

Profitability is expected to be around the 2024 level of 0.75% over the same period.

Net interest margin (NIM) narrowing is expected to slow over the next 12-18 months as declining deposit rates keep total liability costs lower, Moody’s said. The bank’s reported NIM has narrowed by 12 basis points (bps) to 1.72% for the first nine months of 2025.

Recovery of fee income from wealth management and capital market related business also supports the company's profitability, Moody’s said.

However, credit costs are expected to stay high because of the risk of forming new non-performing loans (NPLs). The bank’s buffer for loan loss reserves will mitigate the volatility in profitability, the ratings agency said.

“We expect Industrial Bank's funding structure to remain moderate over the next 12-18 months, with somewhat reliance on less-stable funds, mitigated by ample liquidity to cover short-term cash outflows,” it said.

Industrial Bank has reportedly strengthened its retail deposit acquisition in recent years, with retail deposit making up 29% of total deposits as of end-June 2025.

“We view the bank's liability accumulation from its clearing and settlement operations as a mitigant against funding risk,” Moody’s said. Liquidity coverage ratio is 106.05% as of 30 September 2025.