Industrial and Commercial Bank of China (Asia) Ltd.

This report does not constitute a rating action. Overview Key strengths Key risks Core subsidiary of the Industrial and Commercial Bank of China Ltd. (ICBC) group. Exposure to high economic risk in China and strains in Hong Kong commercial real estate (CRE). Moderate likelihood of support from the Hong Kong government. Weaker retail banking business in Hong Kong relative to peers. Strong capitalization. In our view, the bank possesses sufficient capital buffer to absorb profitability pressure from declining net interest margin (NIM) and increasing cost of provision. However, the proportion of hybrid instruments in the bank's capital structure is higher than the average of peers and this somewhat moderates its capital strength. ICBC Asia?s robust capitalization, above-average provisioning, and exposure

...Industrial and Commercial Bank of China (Asia) Ltd.'s (ICBC Asia) capitalization is likely to remain strong over the next two years. In our view, the bank possesses sufficient capital buffer to absorb profitability pressure from declining net interest margin (NIM) and increasing cost of provision. However, the proportion of hybrid instruments in the bank's capital structure is higher than the average of peers and this somewhat moderates its capital strength. Risks remain manageable despite challenging conditions in Hong Kong's property market. ICBC Asia's robust capitalization, above-average provisioning, and exposure to borrowers with...

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