Bank of China Ltd.

We project asset growth at about 9.4% per annum on average over 2023-2025, up from 7.1% in 2019. Meanwhile, lingering net interest margin (NIM) pressure could reduce the return on average assets (ROAA) to an average of 0.73% over this period, from 0.92% in 2019. Annualized ROAA was 0.82% in the first nine months of 2023. BOC's diversified loan portfolio mitigates these strains. Mainland real-estate loans accounted for less than 4.5% of the group's loan book as of end-June 2023. Meanwhile, the group's overseas nonperforming loan (NPL) ratio remained low at 1.21%, better than the 1.30% for its mainland exposure. The stable outlook on BOC reflects our view that it can maintain its credit profile over the next two years.

...Bank of China Ltd. (BOC) may have a narrower capital buffer amid elevated asset growth and strains on profitability. In our base case, BOC's risk-adjusted capital (RAC) ratio could dip to 7.0%-7.5% over 2024-2025, down from 7.7% as of end-June 2023. This assumes low double-digit loan growth to support China's economic recovery, and takes into account additional external capital funding. An incremental capital decrease of this magnitude will have no rating impact, all other factors being equal and unchanged. We project asset growth at about 9.4% per annum on average over 2023-2025, up from 7.1% in 2019. Meanwhile, lingering net interest margin (NIM) pressure could reduce the return on average assets (ROAA) to an average of 0.73% over this period, from 0.92% in 2019. Annualized ROAA was 0.82% in the first nine months of 2023....

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