The rating on Bank of Communications (BOComm) reflects a degree of implicit support from the Chinese government. However, the rating is constrained by the bank's weak (though improving) profitability, its high level of nonperforming loans (NPLs), and its inadequate loan loss provisions. As the commercialization of state-owned banks progresses, regulatory policies evolve, and tighter restrictions are imposed on Chinese financial institutions, the rating on BOComm is likely to increasingly reflect the bank's own financial strength and its ability to manage changes and improve its financial performance. In the event that there is any sale of a stake in the bank to a foreign financial institution, the resulting changes in BOComm's strategic direction, risk management capacity, and capitalization would be more
