The prospect of further losses from investments in United States subprime-related securities is likely to loom large in the minds of shareholders when Bank of China and its Hong Kong subsidiary announce their annual earnings results tomorrow.
Bank of China, the mainland's third-largest lender, had set aside bad-debt provisions of US$794 million as of the end of September last year.
But market watchers expect tomorrow's report to show provisioning has been raised to cover revaluation losses because of the deterioration in market conditions since then.
The puzzle, however, is the size of the likely increase in provisions and this has not been helped by the fact that the bank has not given shareholders a profit forecast.
'BOC is the only listed mainland bank that hasn't given a profit forecast, and earnings will likely lag behind its peers,' said Credit Suisse in a profit preview, adding that last year's earnings would likely be up just 1 per cent on the profit of 43.35 billion yuan (HK$47.89 billion) in 2006.
Earnings forecasts from other analysts varied widely from an increase of 1.2 per cent to a jump of 24.7 per cent to 53.41 billion yuan. The rare lack of consensus reflected the uncertainty in the marketplace over the level of subprime-related provisioning likely to emerge in the results.