Bulletin: Bank of China Has Adequate Buffers To Withstand COVID-19

HONG KONG (S&P Global Ratings) March 27, 2020--S&P Global Ratings said today that the profitability of Bank of China Ltd. (BOC: A/Stable/A-1) will be dented this year due to weaker global growth, lower interest rates, and asset quality impairments. However, the rating should be able to withstand the hit. BOC is one of the largest banks in China and is more resilient to market volatility. It may even benefit from a flight to quality. However, we believe BOC will find it difficult to maintain its 2019 operating profit growth of 10% in 2020. In the analysts' briefing today, management guided that overdue loans will rise in the first half of 2020, and net interest margins will be pressured by loan

...March 27, 2020 HONG KONG (S&P Global Ratings) March 27, 2020--S&P Global Ratings said today that the profitability of Bank of China Ltd. (BOC: A/Stable/A-1) will be dented this year due to weaker global growth, lower interest rates, and asset quality impairments. However, the rating should be able to withstand the hit. BOC is one of the largest banks in China and is more resilient to market volatility. It may even benefit from a flight to quality. However, we believe BOC will find it difficult to maintain its 2019 operating profit growth of 10% in 2020. In the analysts' briefing today, management guided that overdue loans will rise in the first half of 2020, and net interest margins will be pressured by loan prime rate repricing in China and rate cuts in the U.S. We expect BOC's return on average assets to fall by about 15 basis points from 0.92% in 2019, given our baseline scenario with China's 2020 GDP growth at 2.9%. The decline in profitability could weaken the bank's capital ratios....

Bulletin