Bank of China beats estimates to post strongest profit rise among big state-owned banks

Bank of China, China’s fourth-largest bank by assets, reported net profits for 2016 rose 2.58 per cent year on year, beating analysts’ expectations and higher than the profit gains posted by its competitors earlier this week.

BOC, the last of the nation’s biggest state-owned banks to release 2016 results, reported net profit of 184.1 billion yuan (US$26.7 billion), beating an average estimate of 167 billion yuan by analysts polled by Bloomberg.

The result was bolstered by a 23.64 per cent rise in non-interest revenue to 179.6 billion yuan, offsetting the 6.88 per cent decline in net interest revenue.

BOC’s non-performing loan (NPL) ratio, a key metric of asset quality, rose 3 basis points to 1.46 per cent, the lowest among China’s large banks. Agricultural Bank of China and Industrial and Commercial Bank of China posted ratios of 2.37 per cent and 1.62 per cent respectively.

Chen Shujin, an analyst with Huatai Financial Holdings, said she was impressed by BOC’s bad-loan provision, which stood at 162.8 per cent, 9.5 percentage points higher than a year ago. That was higher than its peers and beat estimates, which Chen said reflected the bank’s intent to set aside a larger provision to alleviate the burden for 2017 even it meant less profit for this year.