Profit rises 85pc to 21.7b yuan, beating estimates
Bank of China, the nation's third-largest lender, set aside US$198 million for subprime investments in the United States in the first quarter but still reported a better than expected 85.15 per cent growth profit.
The impairment loss was booked following the US$1.3 billion provision it made last year, and analysts are expecting more could be made because of the uncertain market.
'Given the continued market volatility, there could potentially be a need to make a provision in the future,' said Merrill Lynch in a research report.
BOC trimmed its US subprime asset-backed securities to US$4.43 billion at the end of last month, compared with US$5 billion at the end of last year, according to a filing with the Hong Kong stock exchange yesterday.
The carrying value of its US subprime investment equalled 1.82 per cent of the group's investment portfolio, down from 2.1 per cent in December last year.
'The group will continuously follow developments in the US mortgage market and assess the impairment on related debt securities in a prudent manner in accordance with accounting standards requirements,' the bank said.