Bank of China Ltd.

At the same time, BOC's diversified loan portfolio mitigates asset-quality pressure from mainland property strains. Mainland real-estate loans accounted for less than 4.5% of the group's loan book as of Dec. 31, 2022. Asset growth is likely to remain elevated at about 8.5% per annum on average over our forecast period, up from the pre-pandemic 7.1% in 2019. Meanwhile, persistent net interest margin (NIM) pressure could reduce the return on average assets (ROAA) to an average of 0.81% over 2023-2025, from 0.92% in 2019. Annualized ROAA was 0.83% in the first quarter of 2023 and 0.85% in 2022. The stable outlook on BOC reflects our view that it can maintain its credit profile over the next two years. The bank's

...Bank of China Ltd. (BOC) should benefit from less asset quality pressure as China's economy recovers. We forecast the bank's nonperforming asset (NPA) ratio will fall to 3.6% as of end-2025 from our estimate of 4.1% as of end-2022. The reopening of China's economy should boost GDP growth to 5.5% in 2023 and about 5% in 2024-2025. At the same time, BOC's diversified loan portfolio mitigates asset-quality pressure from mainland property strains. Mainland real-estate loans accounted for less than 4.5% of the group's loan book as of Dec. 31, 2022. Rapid asset growth to support the economy could narrow the capital buffer. In our view, BOC's risk-adjusted capital (RAC) ratio could average 7.2% in 2023-2025, down from 7.7% as of end-2022. This assumes an absence of external capital funding. Asset growth is likely to remain elevated at about 8.5% per annum on average over our forecast period, up from the...

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