Good domestic franchise Strategic investor synergies Government support Improving profitability supported by increasingly diversified business Relatively high risk appetite favoring market share expansion Modest capitalization Latent credit risk associated with aggressive loan growth The rating on Bank of Communications Co. Ltd. (BoCom) reflects the bank's good business profile, which is underpinned by an entrenched domestic franchise, implicit government support, and improving financial performance. The rating also takes into consideration the strong likelihood that BoCom's increasingly close partnership with Hongkong and Shanghai Banking Corp. Ltd. (HSBC Asia-Pacific; AA/Stable/A-1+), the bank's second-largest shareholder, will further improve its competitiveness in retail banking and risk management. Counterbalancing factors include the bank's under-tested risk management system, and pressured capitalization and latent credit risks associated with
