Bank of China (Hong Kong) Ltd.

The bank's property-related exposure is about one-third of its total loans. However, the NPL ratio for the property-related portfolio has been very low. In addition, BOCHK's high NPL coverage ratio provides additional buffer to absorb credit losses. The bank's credit exposure to property developers in mainland China is relatively small, and the majority of them are state-owned developers with loan-to-value of less than 50%. The stable outlook reflects our expectation that BOCHK will maintain its high systemic importance in Hong Kong, and its close linkage to the creditworthiness of the wider Bank of China (BOC) group over the next two years. The outlook also reflects our expectation that BOCHK will maintain its business and financial strength over the same time

...Bank of China (Hong Kong) Ltd. (BOCHK) is likely to maintain resilient asset quality despite the resurgence of COVID-19 and strains in the China property sector. The bank has a proven track record of managing its nonperforming loans (NPLs) at a very low level through cycles. We expect BOCHK's robust risk management framework and prudent underwriting practices to also continue to support its asset quality. The bank's property-related exposure is about one-third of its total loans. However, the NPL ratio for the property-related portfolio has been very low. In addition, BOCHK's high NPL coverage ratio provides additional buffer to absorb credit losses. The bank's credit exposure to property developers in mainland China is relatively small, and the majority of them are state-owned developers with loan-to-value of less than 50%. Capitalization to maintain strong over the next 24 months. We forecast credit growth for BOCHK to remain steady at mid-to-high single digits over the next two years....

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