Bank of China (Hong Kong) Ltd.

BOCHK's controlled risk appetite, manageable at-risk exposure, conservative recognition of NPLs, and ample provision coverage will continue to support its asset quality. The bank scaled back its exposure to high-risk regions (like mainland China) and sectors (such as Chinese real estate developers) in the first half of 2022. The stable outlook on BOCHK reflects our expectation that the bank will maintain its high systemic importance in Hong Kong, and 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 period. This is reflected in the bank's established market franchise, solid capitalization, and strong funding

...Bank of China (Hong Kong) Ltd. (BOCHK) can tide over economic strains from COVID-19 and China's property sector. The bank has a track record of low nonperforming loans (NPLs) through cycles. BOCHK's controlled risk appetite, manageable at-risk exposure, conservative recognition of NPLs, and ample provision coverage will continue to support its asset quality. The bank scaled back its exposure to high-risk regions (like mainland China) and sectors (such as Chinese real estate developers) in the first half of 2022. Rising interest rates will keep capitalization strong. Credit growth for BOCHK will likely remain in the mid-single digit over the next two years. The bank's net interest margin (NIM) should benefit from interest-rate hikes in Hong Kong. While credit costs could stay elevated amid rising NPL formation, potentially higher NIM could improve profitability and support internal capital generation....

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