Good domestic franchise Increasing diversity Sound asset quality Satisfactory liquidity and capitalization Narrowing net interest margin Moderate pricing power The ratings on Bank of East Asia Ltd. (BEA) reflect the bank's sound asset quality, satisfactory liquidity, and above average capitalization. Moderating factors include a narrowing net interest margin and moderate pricing power in a competitive operating environment. BEA is the fourth-largest domestically incorporated bank in Hong Kong, where it maintains a good franchise. Although its market share is relatively small compared with the dominant banks in the system, BEA is seeking geographical diversification and has expanded its operations in North America and mainland China. The company has also sought business diversity through its insurance subsidiary and the recent acquisition of
