Moody's expert says nation's banking sector liquidity is 'fairly adequate'

A declining loan-to-deposit ratio for Chinese banks in the first quarter of 2019 indicated that the liquidity of the banking sector is generally adequate, said an expert of Moody's Investors Service.

"After rising for two years, the loan-to-deposit ratio dropped in the first quarter of this year mainly because banks' deposits grew at a faster pace than loans during the same period," said Nicholas Zhu, vice-president and senior credit officer at Moody's, one of the "Big Three" global credit ratings agencies.

Deposits increased more rapidly because it takes time for banks to switch from the old wealth management products with implicitly guaranteed principal and expected rates of return to new ones with non-guaranteed principal and floating income, according to the initial analysis of data by Moody's.