Bulletin: BOC Profits To Bounce Back Alongside Economic Rebound

HONG KONG (S&P Global Ratings) March 30, 2021--S&P Global Ratings said today that an economic rebound in Bank of China Ltd.'s (BOC; A/Stable/A-1) key markets of mainland China and Hong Kong will sustain the lender's profit recovery in 2021. We expect BOC's earnings expansion to return to mid-single-digit levels this year. Faster revenue growth from global reflation should mitigate credit cost strain as China rolls back forbearance policies. The bank's full-year profit was up 1.6% in 2020, from a contraction of 11% year-on-year in the first half of last year. Reduced impairment costs drove that improvement as China's economy quickly recovered from an initial COVID shock. The state-controlled lender also exhibited strong cost discipline through the pandemic. BOC's return on

...March 30, 2021 HONG KONG (S&P Global Ratings) March 30, 2021--S&P Global Ratings said today that an economic rebound in Bank of China Ltd.'s (BOC; A/Stable/A-1) key markets of mainland China and Hong Kong will sustain the lender's profit recovery in 2021. We expect BOC's earnings expansion to return to mid-single-digit levels this year. Faster revenue growth from global reflation should mitigate credit cost strain as China rolls back forbearance policies. The bank's full-year profit was up 1.6% in 2020, from a contraction of 11% year-on-year in the first half of last year. Reduced impairment costs drove that improvement as China's economy quickly recovered from an initial COVID shock. The state-controlled lender also exhibited strong cost discipline through the pandemic. BOC's return on average equity fell to 10.61% in 2020, compared with 11.45% a year ago. BOC's nonperforming asset (NPA) ratio has peaked and will steadily decline in the next 24 months, in our view. We expect slightly over...

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