Bank of China (Hong Kong) Ltd.

Strong franchise and extensive branch network in Hong Kong. Strong capital and earnings. Above-average funding and strong liquidity. High systemic importance in Hong Kong. Exposure to rising economic risk in Hong Kong and China. Somewhat high property-related exposures. The stable outlook reflects our expectation that Bank of China (Hong Kong) Ltd. (BOCHK) will maintain its strong business position, capital, earnings, liquidity, and above-average funding profile over the next 24 months. We view the likelihood of an upgrade as low. BOCHK's planned sale of Nanyang Commercial Bank Ltd. (NCB) could reduce the economic risk it faces and enhance its capitalization--but only temporarily. We believe the sale is unlikely to have a lasting benefit for the bank's credit profile. We could lower

... Stable The stable outlook reflects our expectation that Bank of China (Hong Kong) Ltd. (BOCHK) will maintain its strong business position, capital, earnings, liquidity, and above-average funding profile over the next 24 months. We view the likelihood of an upgrade as low. BOCHK's planned sale of Nanyang Commercial Bank Ltd. (NCB) could reduce the economic risk it faces and enhance its capitalization--but only temporarily. We believe the sale is unlikely to have a lasting benefit for the bank's credit profile. We could lower the ratings on BOCHK if: (1) the SACP falls by two notches to 'a-'; or (2) the SACP weakens by at least one notch while we consider the likelihood of extraordinary government support to have diminished. We believe both scenarios are unlikely over the next two years....

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