Good domestic franchise Strategic investor synergies Government support Improving financial profile Latent credit risk Under-tested risk management system Modest capitalization The rating on Bank of Communications Co. Ltd. (BoCom) reflects the bank's good business profile, which is underpinned by an entrenched domestic franchise and implicit government support, and its improving financial profile. The rating also takes into consideration the strong likelihood that BoCom's partnership with Hongkong and Shanghai Banking Corp. Ltd. (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 latent credit risk against a backdrop of its relatively rapid balance sheet expansion and under-tested risk management system, and modest capitalization. Standard&Poor's regards BoCom as a
