Bank of Communications Co. Ltd. And Subsidiaries

The positive outlook on BoCom reflects our expectation of a one-in-three chance that the economic risk conditions in China will improve. We also expect the bank to maintain its asset quality in line with peers' and its adequate liquidity position at least over the next two years. We may upgrade BoCom if economic risk conditions improve, assuming all other factors, including bank specific factors, are constant. We would also raise the rating on BoCom if we upgraded China or if the likelihood of extraordinary government support to the bank increases. We may revise the outlook to stable if we no longer expect a positive trend on China's economic risk. We could also revise the outlook to stable if factors specific

...Bank of Communications Ltd. (BoCom)'s strategy of becoming the "leading bank in the Yangtze River Delta" will solidify its customer base, supporting its long-term growth. The bank has been proactively implementing the government's Yangtze River Delta integrated development strategy. It has enhanced coordination among regional branches in the area to improve service efficiency. Closer integration with the digital government service platform has strengthened the bank's customer assessment and acquisition capabilities. We expect the profit contribution from the region will continue to increase over the next few years. China's economic recovery from COVID-19 supports BoCom's credit metrics. The bank's asset quality pressure could lessen as borrowers resume servicing a good proportion of forborne loans. This will gradually reduce the drag of heightened asset impairment losses on earnings. Nevertheless, the risks from China's economic rebalancing remain. We also expect BoCom's revenue to continue...

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