Bank of China (Hong Kong) Ltd.

BOCHK's controlled risk appetite, manageable at-risk exposure, and adequate collateral and provision coverage will continue to support its asset quality. The bank continued to reduce its loan exposure to high-risk regions like mainland China and Southeast Asia and sectors such as Chinese real estate in the first half of 2023. Meanwhile, credit costs could stay high as BOCHK rebuilds its provision coverage buffer. But higher NIM should support profitability and internal capital generation. The stable rating 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 Ltd. (BOC) group over the next two years. The outlook also reflects our expectation

...Bank of China (Hong Kong) Ltd. (BOCHK) can manage strains from China's property sector and the end of moratorium policies in Southeast Asia. We forecast its nonperforming loan (NPL) ratio will remain under 1% over 2023-2025. The bank has a track record of low NPLs through cycles. Its reported NPL ratio increased to 0.73% at end-June 2023 from 0.53% at end-2022, but this was still lower than the sector average of 1.50%. BOCHK's controlled risk appetite, manageable at-risk exposure, and adequate collateral and provision coverage will continue to support its asset quality. The bank continued to reduce its loan exposure to high-risk regions like mainland China and Southeast Asia and sectors such as Chinese real estate in the first half of 2023....

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