The Asian Development Bank (ADB) is projected to maintain a strong financial position even as it increases its focus on climate financing.
According to a July 2025 Moody’s Ratings commentary:
Increased Lending and Leverage
The ADB’s leverage ratio has significantly increased, nearing 300% compared to approximately 260% in 2020. This rise is attributed to increased lending, a trend expected to persist in the coming years. Moody’s anticipates this ratio will continue to climb as the ADB boosts lending to enhance its development impact, aligning with shareholder demands. However, it’s expected to remain consistent with other similarly-rated institutions, as they are also increasing their lending activities.
Mitigating Risks
To counter the effects of rising leverage, the ADB is increasingly utilizing credit protection instruments and maintaining prudent risk management.
As of May 2025, the ADB has secured $2.28 billion in first-loss guarantees from highly-rated shareholders through its IF-CAP program. These guarantees offer substantial credit protection, allowing the ADB to leverage them 4.5 times to unlock approximately $10.3 billion in dedicated climate financing for its sovereign borrowers.
Strong Portfolio and Performance
The credit quality of the ADB’s loan portfolio is robust, benefiting from good diversification across various countries and sectors. This is further enhanced by exposure exchange agreements with other multilateral development banks (MDBs).
The ADB also holds preferred creditor status for its sovereign lending, which constitutes about 96% of its total loan portfolio. In 2024, the ADB’s nonperforming asset ratio was a low 0.4%, and Moody’s does not foresee any significant deterioration in its asset performance.
Robust Liquidity and Funding
Moody’s assesses the ADB’s liquidity and funding as “very strong.” This is supported by its established access to the funding market, a diverse investor base, and ample liquidity buffers.
Click here for more on Banking
