The rating on the Bank of Communications reflects the bank's weak profitability, a high level of nonperforming loans (NPLs), and inadequate capital ratios. Somewhat mitigating these concerns is the apparent support given by the Chinese government. In addition, while the bank's financial parameters are weak by international standards, they compare favorably with those of the four wholly state-owned commercial banks in China. Standard&Poor's expects these financial parameters, which have deteriorated, to continue on a negative trend as the reform of state-owned enterprises (SOEs) exert pressures on loss-making companies. Bank of Communications' operations are generally regarded as more focused, flexible, and efficient than those of its domestic peers. However, such competitive advantages are counterbalanced by the bank's smaller market
