Bulletin: Bank of China's Diverse Exposures Will Offset Property-Sector Pain

SINGAPORE (S&P Global Ratings) March 31, 2023--Bank of China Ltd. (BOC)'s diversified portfolio will soften the strain from its exposures to China's struggling property sector. This was demonstrated by its 2022 results, announced on March 30. The bank's nonperforming loan ratio was stable in 2022, despite a jump in property-related NPLs. We expect BOC (A/Stable/A-1) will continue to feel the strain on its real estate exposure, given our view that a V-shaped property recovery is unlikely. The bank's NPL ratio for domestic China real estate increased to 7.23% at the end of 2022, from 5.67% as of end-June 2022. But portfolio diversification mitigates this risk. Lower NPLs in sectors such as manufacturing and transportation offset higher real estate NPLs in

...March 31, 2023 SINGAPORE (S&P Global Ratings) March 31, 2023--Bank of China Ltd. (BOC)'s diversified portfolio will soften the strain from its exposures to China's struggling property sector. This was demonstrated by its 2022 results, announced on March 30. The bank's nonperforming loan ratio was stable in 2022, despite a jump in property-related NPLs. We expect BOC (A/Stable/A-1) will continue to feel the strain on its real estate exposure, given our view that a V-shaped property recovery is unlikely. The bank's NPL ratio for domestic China real estate increased to 7.23% at the end of 2022, from 5.67% as of end-June 2022. But portfolio diversification mitigates this risk. Lower NPLs in sectors such as manufacturing and transportation offset higher real estate NPLs in its mainland corporate loan book in 2022. BOC's overall NPL ratio was broadly stable at 1.32% in 2022, from 1.33% in the previous year. We use a broader measure of nonperforming asset (NPA) ratio to track asset quality; this...

Bulletin