Bank of China gets its rat­ing up­graded

China Daily (Canada) - - ACROSS AMERICA - By AMY HE in New York amyhe@chi­nadai­lyusa.com

Stan­dard & Poor’s Rat­ings Ser­vices up­graded Bank of China’s stand­alone credit pro­file from BBB- to BBB, re­vis­ing their as­sess­ment of the bank from “mod­er­ate” to “ad­e­quate,” ac­cord­ing to a state­ment.

The rat­ings agency main­tained the bank’s Coun­ter­party Credit rat­ing at “A/A-1.”

“Stan­dard & Poor’s Rat­ing Ser­vices reck­oned the re­vi­sion re­flected the Bank’s sta­ble as­set qual­ity with very low credit loss ex­pe­ri­ence in re­cent years, mod­er­ated credit growth and sig­nif­i­cant off­shore as­set port­fo­lio, which di­ver­sify the Bank’s over­all risk,” Bank of China (BOC) said in the state­ment.

BOC, China’s fourth-largest lender by as­sets, also said that S&P viewed the bank as hav­ing main­tained its busi­ness po­si­tion, with sta­ble cap­i­tal, strong fund­ing and liq­uid­ity man­age­ment.

Ear­lier in De­cem­ber, Bank of China ranked sev­enth on Mill­ward Brown’s an­nual list of 100 most-valu­able Chi­nese brands, just above state-owned oil gi­ants PetroChina and Sinopec and insurance com­pany China Life. Mill­ward Brown, a mar­ket-re­search com­pany un­der me­dia group WPP, val­ued BOC at $13.6 bil­lion.

Mill­ward Brown com­mended the bank for ex­pand­ing its in­ter­na­tional ren­minbi clear­ing sys­tem. The re­search com­pany called BOC China’s “most in­ter­na­tional” bank with pres­ence in 36 coun­tries, and said that the bank took “a num­ber of steps to re­duce its li­a­bil­i­ties, ex­pand its core low cost de­posits and tighten its risk con­trols,” all in re­sponse to con­cern over debt in the Chi­nese fi­nan­cial sys­tem.

The bank an­nounced

in Oc­to­ber re­sults for the first nine months of the year and re­ported $11.9 bil­lion of non­per­form­ing loans, giv­ing it a non-per­form­ing loan ra­tio of 0.96 per­cent, which is up 0.01 per­cent from the same pe­riod last year.

BOC made $19.8 bil­lion in net profit, a 13.2 per­cent in­crease year-on-year for the same pe­riod. Its net in­ter­est in­come was $34.3 bil­lion for the first nine months, and the bank re­ported as­sets and li­a­bil­i­ties of $2.2 tril­lion and $2.1 tril­lion, re­spec­tively. Cus­tomer de­posits to­taled $1.7 tril­lion, up 9.5 per­cent year-on-year.

The lender con­ducted $440 bil­lion of cross-bor­der ren­minbi trade this year, up by 56 per­cent com­pared to the same pe­riod last year, it said. BOC be­came the first ren­minbi clear­ing bank in Lux­em­bourg, hav­ing al­ready been des­ig­nated the ren­minbi clear­ing bank in Hong Kong, Tai­wan, and Malaysia.

“Fully lever­ag­ing on ad­van­tages of its global ser­vice net­work and diver­si­fied plat­forms, the Bank con­tin­ued to im­prove its global ser­vice ca­pa­bil­ity and sup­ported the Chi­nese en­ter­prises ‘go­ing global,’” the bank said in its re­sults.

Es­tab­lished in the US in 1981, BOC said it aims to make its branch in New York a ma­jor player in cross-bor­der ren­minbi trade in the US.

“Bank of China New York will seize this his­toric op­por­tu­nity to rig­or­ously de­velop ren­minbi busi­ness,” the bank wrote in an e-mail note to China Daily, “and to strive to be­come a ma­jor ren­minbi clear­ing bank in the US, while sup­port­ing na­tional pol­icy to do more for the glob­al­iza­tion of ren­minbi.”

BOC’s to­tal over­seas as­sets and profit for the first nine months of the year be­fore tax were $584.6 bil­lion and $4.83 bil­lion, re­spec­tively, which ac­counted for 24.72 per­cent and 18.5 per­cent of the bank’s to­tal pre-tax as­sets and profit, ac­cord­ing to the re­port.

In Oc­to­ber, BOC con­tin­ued its ex­pan­sion in North Amer­ica by es­tab­lish­ing its 11th branch in Canada in Mon­treal, of­fer­ing ser­vices in­clud­ing cor­po­rate cross-bor­der ren­minbi set­tle­ment, trade fi­nanc­ing, com­mer­cial mort­gages, and project fi­nanc­ing.

In ad­di­tion to Mon­treal, the bank also cel­e­brated the open­ing of its fourth US branch in Chicago in March, which had al­ready opened for busi­ness in De­cem­ber last year. As the wave of Chi­nese in­vest­ments con­tin­ues in the US, BOC’s Chicago branch will serve com­pa­nies do­ing busi­ness in Illi­nois and other Mid­west­ern states.

“As a large global bank­ing group, Bank of China will spare no ef­fort in pro­mot­ing China-US part­ner­ship and seiz­ing op­por­tu­ni­ties in bank­ing de­vel­op­ment be­tween the two coun­tries,” Yue Yi, a BOC vi­cepres­i­dent, told China Daily.

“The strat­egy is to serve Chi­nese en­ter­prises go­ing abroad as well as multi­na­tional com­pa­nies in­vest­ing in China,” Yue said.

Mayor Rahm Emanuel said in a con­grat­u­la­tory note that the open­ing of a branch in Chicago be­comes another fi­nan­cial re­source for the more than 40 Chi­nese com­pa­nies that al­ready op­er­ate in and around the third-largest US city, and its pres­ence could bring about more re­gional in­vest­ment.

Bank of China, along with Mor­gan Stan­ley, con­trib­uted to Shuanghui In­ter­na­tional’s ac­qui­si­tion of Smith­field Foods Inc this year, the big­gest USChina deal. The two fi­nan­cial in­sti­tu­tions pro­vided $7 bil­lion in loans to Shuanghui for the ac­qui­si­tion, and ac­cord­ing to Reuters, BOC pro­vided $4 bil­lion in a five-year term loan.

The bank also took part in the China Na­tional Off­shore Oil Corp’s ac­qui­si­tion of Cana­dian oil and gas com­pany Nexen, ac­cord­ing to the bank’s earn­ings re­port. Wan Li con­trib­uted to this story.

BAI JIE / FOR CHINA DAILY

A Bank of China branch in Man­hat­tan. Stan­dard & Poor’s up­graded the rat­ing on the Chi­nese bank be­cause of the qual­ity of as­sets, low credit losses and sig­nif­i­cant off­shore port­fo­lios.

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