--- title: "Fitch has adjusted the rating outlook of Shin Kong Financial Holding and its subsidiaries to positive, estimating that the acquisition will help enhance profitability" type: "News" locale: "en" url: "https://longbridge.com/en/news/286088721.md" description: "Fitch Ratings has adjusted the rating outlook for Yongfeng Financial and its subsidiaries to positive, confirming the long-term issuer default rating at BBB+. The merger with Beijing Jiya will likely enhance Yongfeng Financial's profitability, with the post-merger deposit market share expected to increase from 3.8% to approximately 4.2%. Although the double leverage ratio is expected to temporarily rise in 2025, Fitch anticipates it will remain at a moderate level in the medium term. The merger will create cross-selling opportunities, supporting interest and fee income" datetime: "2026-05-12T11:20:53.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286088721.md) - [en](https://longbridge.com/en/news/286088721.md) - [zh-HK](https://longbridge.com/zh-HK/news/286088721.md) --- # Fitch has adjusted the rating outlook of Shin Kong Financial Holding and its subsidiaries to positive, estimating that the acquisition will help enhance profitability Fitch Ratings has adjusted the rating outlook for Yongfeng Financial Holding （2890）, Yongfeng Commercial Bank, Beijing Jiyae Commercial Bank, and Yongfeng Bank (China) from stable to positive, and confirmed the long-term issuer default ratings for all entities at BBB+. Fitch believes that the bank's intrinsic credit profile is expected to improve after its merger with Beijing Jiyae Bank （2809） due to an expanded business footprint, increased business revenue, and higher profitability. The merger is expected to be completed in December or January next year. According to the pro forma basis, Beijing Jiyae Bank will account for 11% of the total assets of the merged bank. The rating rationale indicates that Yongfeng Financial Holding's rating and outlook are consistent with Yongfeng Bank, as Yongfeng Bank will continue to serve as the group's main subsidiary. Although the acquisition of Beijing Jiyae Bank will temporarily increase Yongfeng Financial Holding's common equity double leverage ratio (DLR) to 120% by the end of 2025 from 112% at the end of 2024, Fitch expects this ratio to remain at a moderate level in the medium term. After the acquisition of Beijing Jiyae Bank in October 2025, Yongfeng Financial Holding's common equity double leverage ratio is expected to rise to 120% by the end of 2025. Fitch anticipates that after the merger of Yongfeng Bank and Beijing Jiyae Bank is completed, this ratio will decline to about 115%, as approximately 25% of the merger consideration will be paid in cash, while the remaining 75% will be paid through the issuance of new shares by Yongfeng Bank. Yongfeng Financial Holding's stable profitability and prudent dividend distribution will help reduce the double leverage ratio. The positive outlook on Yongfeng Bank's business profile reflects Fitch's belief that its merger with Beijing Jiyae Bank is expected to strengthen Yongfeng Bank's business scale and revenue-generating capacity over the next two years. It is anticipated that the deposit market share will increase from 3.8% to about 4.2% after the merger. Cross-selling opportunities: Fitch expects Yongfeng Bank to more effectively cross-sell its products to Beijing Jiyae Bank's small and medium-sized enterprises and retail customers, particularly in wealth management and digital banking, thereby supporting interest and fee income. The bank is also committed to seizing more business opportunities arising from increased investments in the southern region. Most of Beijing Jiyae Bank's branches are located in this area, and this wave of increased investment is primarily driven by corporate repatriation. Stable risk profile: Fitch believes that Yongfeng Bank's robust risk management supports its asset quality, keeping it consistently better than its peers. According to Fitch's estimates, by the end of 2025, Yongfeng Bank's exposure to mainland China will have decreased to about 6% of its assets, while the industry average is around 4%. The merger with Beijing Jiyae Bank has a limited impact on the risk profile of the merged bank. Beijing Jiyae Bank has gradually adjusted its investment portfolio and its credit and investment policies to facilitate integration with Yongfeng Bank's existing risk management framework after the merger. Controllable asset quality risk: We believe that the asset quality rating has sufficient buffer against a slight increase in the impaired loan ratio, which is projected to be 0.65% in 2025. If asset quality weakens, it is most likely to stem from exposure to emerging markets in Asia and commercial real estate exposure in Hong Kong and mainland China, which accounts for about 1% of total loans. The bank's higher proportion of low-risk residential secured loans, lower borrower concentration, and prudently selected overseas loans should support overall asset quality Beijing Jiya's impairment loan ratio at the end of 2025 is 0.03%. We expect that this merger will not have a significant impact on the impairment loan ratio of the merged bank. The merger helps enhance profitability: The "positive" outlook on the profitability and earnings capability of Yongfeng Bank reflects Fitch's belief that the merger with Beijing Jiya should help strengthen Yongfeng Bank's profitability from 2027 to 2028. The merged bank should benefit from cross-selling, stronger fee income, and more stable loan growth from a larger customer base. Compared to Yongfeng Bank, Beijing Jiya has a lower deposit cost and higher yields from its small business loans and overseas bond investment portfolio. Yongfeng Bank's operating profit/risk-weighted asset ratio is expected to rise from 1.3% in 2024 to 1.45% in 2025, mainly benefiting from increased net interest income driven by lower dollar funding costs and wealth management sales, particularly insurance sales, boosting net fee income. Capital levels remain robust: Fitch forecasts that after the merger is completed, Yongfeng Bank's Common Equity Tier 1 (CET1) ratio will rise from 11.4% at the end of 2025 to about 12%. Yongfeng Bank will issue new shares and use its own cash to fund the transaction rather than incurring debt, and its goodwill should remain at a moderate level. Strong liquidity profile: Taiwan's ample system liquidity and Yongfeng Bank's moderate organic growth will support its ability to maintain robust liquidity after the merger. As of the end of 2025, Yongfeng Bank and Beijing Jiya's deposit ratios are 72% and 78%, respectively. Fitch expects that Yongfeng Bank's push for digital development will help attract new customers, including those from Beijing Jiya, and expand its deposit base. Both Yongfeng Bank and Beijing Jiya maintain a stable deposit business foundation; as of the end of 2025, customer deposits account for 90% and 95% of the total funding sources for Yongfeng Bank and Beijing Jiya, respectively ### Related Stocks - [02210.HK](https://longbridge.com/en/quote/02210.HK.md) ## Related News & Research - [16:47 ETScholarNet Urges Financial Aid Offices to Act Now as Default Risk Climbs](https://longbridge.com/en/news/290477657.md) - [America’s Car-Mart amends credit agreement, secures limited waiver on covenant defaults](https://longbridge.com/en/news/290881844.md) - [FiscalNote extends forbearance on subordinated convertible debt defaults to July 21, 2026](https://longbridge.com/en/news/290740649.md) - [Blackstone $343M loan on Chicago office tower defaults - report](https://longbridge.com/en/news/290722620.md) - [Congyu Intelligent Agricultural Raises HK$67.3 Million Through Share Placing](https://longbridge.com/en/news/290680871.md)