Bank of China
Bank of China is one of the big four state-owned commercial banks of the People's Republic of China – the other three are Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China. Bank of China was founded in 1912 to replace the Government Bank of Imperial China, and is the oldest bank in China. From its establishment until 1942, it issued banknotes on behalf of the Government of the Republic of China along with the "Big Four" banks of the period: the Central Bank of China, Farmers Bank of China and Bank of Communications. Although it initially functioned as the Chinese central bank, in 1928 the Central Bank of China replaced it in that role. Subsequently, BOC became a purely commercial bank.
Action on bad loans produces mixed results
BOC Hong Kong (holdings)
The drive by BOC Hong Kong (Holdings) to clean up its loan book continues to produce mixed results after a core earnings drop last year met most analysts' expectations.
A key factor behind last year's performance was sluggish loan growth. While many of the bank's competitors have shown healthy increases driven by a recovering property market and improved consumer sentiment last year, loans to customers of BOCHK grew only 1.5 per cent to $313.22 billion.
According to the bank, the underperformance is a reflection of an active strategy to change the risk profile of loans, which resulted in a drop in the non-performing loan ratio to 2.95 per cent from 5.78 per cent a year ago.
Tied to a 4 per cent expansion in the bank's performing loan portfolio, the group reported 50.2 per cent earnings growth to $11.96 billion due to a large provision write-back and a recovering property market that boosted gains from revaluation of its premises and investment properties.
Discounting the two factors, which include a reversal from a $1.67 billion bad debt charge in 2003 to a $1.62 billion write-back and a $3.52 billion gain in property revaluation, the company would have recorded a 10 per cent drop in operating profit to $10.35 billion.
Revaluation gains on such a level are unlikely to be repeated in the future.
Meanwhile, net interest income has dropped more than 13 per cent to $11.19 billion, the result of narrowing interest margins.
However, stagnating non-interest income grew only 6 per cent to $4.66 billion and accounted for 29 per cent of operating income.