Bulletin: China Bohai Bank To Feel The Pinch From China's Weakest Regions

SINGAPORE (S&P Global Ratings) March 30, 2023--High exposure to the regions most likely to trail China's 2023 recovery will continue to weigh on the quality of China Bohai Bank Co. Ltd.'s assets. Strains will come from Bohai Bank's lending in north and northeast China, where some cities remain economically depressed. The bank's 2022 annual results, released on March 29, signal weakness. Revenue and pretax profit were down 9% and 37% in 2022, dragged by north and northeast China where they slid 15% and 69%, respectively. Increased provisioning contributed to a low return on average assets of 0.38%, compared with the sector average of 0.76%. The combined stage 2 and 3 loan ratio was 5.70% at the end of 2022, 105

...March 30, 2023 SINGAPORE (S&P Global Ratings) March 30, 2023--High exposure to the regions most likely to trail China's 2023 recovery will continue to weigh on the quality of China Bohai Bank Co. Ltd.'s assets. Strains will come from Bohai Bank's lending in north and northeast China, where some cities remain economically depressed. The bank's 2022 annual results, released on March 29, signal weakness. - Revenue and pretax profit were down 9% and 37% in 2022, dragged by north and northeast China where they slid 15% and 69%, respectively. Increased provisioning contributed to a low return on average assets of 0.38%, compared with the sector average of 0.76%. - The combined stage 2 and 3 loan ratio was 5.70% at the end of 2022, 105 basis points (bps) higher than the combined nonperforming and special mention loan ratio. The gap widened from 29bps in 2021, as more loans entered stage 2 in 2022. As a result, its provision coverage of stage 2 and 3 loans declined to 47% from 49%. We think Bohai...

Bulletin