Bank of China Ltd.

The stable outlook reflects our view that the bank can maintain its credit profile over the next two years. This would be underpinned by its very strong business position, adequate capitalization, above-average funding, and strong liquidity profile. The outlook on BOC also reflects the sovereign rating on China. In our view, the likelihood of extraordinary government support remains extremely high for BOC in a distress scenario. We could downgrade BOC if we lower the sovereign rating on China by one notch and our assessment of the bank's stand-alone credit profile (SACP) deteriorates over the outlook period. We could lower the SACP if: BOC's capitalization weakens significantly as a result of aggressive growth, denoted by a projected risk-adjusted capital (RAC) ratio

...Bank of China Ltd.'s (BOC) credit risk is manageable amid rising defaults from China's economic rebalancing and an uneven recovery overseas. The bank's manageable credit expansion, diversified portfolio, and focus on large borrowers support its credit quality. Steady revenue growth and cost discipline will underpin BOC's profitability. The bank continues to build its retail business, with wealth management at its core. We expect fee income to grow robustly. This would be driven by greater cross-border flows in the Greater Bay Area and the bank's retail assets under management that have exceeded Chinese renminbi (RMB) 11 trillion. The likelihood of government support remains extremely high. Our assessment considers the government's high shareholding and BOC's strong market position in China, an economy that is still predominantly funded by banks. As a state-owned commercial bank, BOC helps to implement government policies, including supporting initiatives to grow inclusive finance loans...

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