The rating on Bank of Communications Co. Ltd. (BoCom) reflects the bank's good business profile, which is underpinned by an entrenched domestic franchise and implicit government support, and its adequate financial profile. The rating also takes into consideration potential benefits to BoCom's operations, risk management, and credit card business, from the partnership with its second-largest shareholder Hongkong and Shanghai Banking Corp. Ltd. (AA/Negative/A-1+). BoCom's latent credit risk from its aggressive loan expansion and under-tested risk management system, and moderated capitalization temper the rating. Standard&Poor's regards BoCom as a systemically important bank and a government-related entity. A two-notch uplift is factored into the rating on BoCom, reflecting the important role that BoCom plays in the Chinese economy and its
