Strong capitalization Good liquidity profile Solid domestic franchise Pressured core profitability Growing latent credit risks The rating on The Bank of East Asia, Limited (BEA) reflects the bank's strong capitalization, good liquidity profile, and solid domestic franchise in Hong Kong. Moderating factors include pressured core earnings and growing latent credit risks from China. BEA has a solid and defendable franchise in Hong Kong, where it is the fifth-largest domestically incorporated bank, but is small relative to the dominant banks in the system. The bank's continuous expansion in China provides opportunities for growth, but also exposes it to higher banking industry risk in a country with a developing economy. China accounted for 37.6% of its total loan book at the end
