NewMoody’s says BOC ahead of pack in overseas push by Chinese banks

The best bet for skirting stagnant growth and heaping bad debt at home for China’s banks might be to get out of China.

The biggest of the lenders are doing just that but Bank of China was far ahead in the game and projected to hold on to that lead, Moody’s Investors Service said in a report on Friday, the first of its kind by the rating agency to address the push overseas for Chinese banks.

An expected 20 per cent expansion abroad over the next three to five years had positive credit implications for the lender, China’s fourth largest by total assets but the biggest in terms of overseas assets. Moody’s also said it expected the bank to issue up to US$30 billion in offshore debt between 2016 and 2018.

China Construction Bank and Industrial and Commercial Bank of China (ICBC) over the past five years have been actively acquiring overseas financial institutions. Between 2010 and 2014, ICBC’s total assets abroad have growth at an annualised rate 34 per cent, compared to just 18 per cent for Bank of China.

ICBC is in the process of finalising a deal for a 75 per cent stake in Turkey’s Tekstil Bankasi. CCB acquired 72 per cent of Brazilian bank Banco Industrial e Comercial last year.

Still, BOC has been pushing abroad for several decades. By the end of 2014, 23 per cent of Bank of China’s pre-tax profit and 30 per cent of its total assets, or about 4.5 trillion yuan, were accounted for by businesses outside of mainland China, Moody’s data showed. The same figures were less than 10 per cent for its peers in China, despite their rapid growth outside of the mainland since 2010.