Bank of China to weather potential losses, asset quality strains: S&P

Bad loans ratio for its mainland property loans has shrunk to 4.94% in June 2024.

Bank of China (BOC) has sufficient cushion against potential losses and asset-quality strains, according to S&P Global Ratings.

The megabank’s asset quality should be “manageable” despite a sluggish property market, the ratings agency said in a report published on September 2024.

BOC ‘s non-performing loans (NPLs) and special mention loans (SMLs) were 2.67% of its total loan book as of end-2024, down from 2.73% in end-2023.

Whilst mainland real-estate loans increased by 8.9% in the first six months of 2024, it accounted for less than 5% of BOC’s loan book. NPL ratio for its mainland real estate loans has also shrunk to 4.94% in end-June, from 5.51% during the end of 2023.

“BOC has a sufficient cushion against potential losses from asset-quality strains. The bank's provision coverage for NPLs and SMLs improved to 93.5% at end-June 2024 from 89.3% at end-2023,"S & P said.

S&P also said that BOCh should maintain adequate capital despite earnings pressure. Its Tier-1 capital ratio was 14% as of end-June, up from 13.8% in 2023.