Bank of China Q4 profit rises 5% while bad loans jump

[SHANGHAI] Bank of China Ltd (BoC) posted profit within expectations on Wednesday, but losses on bad assets doubled and unpaid loans jumped as the country faces its slowest growth rate in a quarter-century.

China's fourth-largest lender reported net profit for the fourth quarter of 38.5 billion yuan (US$6.20 billion), in line with analyst estimates according to Thomson Reuters data and 5 per cent higher than in the same period last year.

BoC is the second of China's so-called big four lenders to report latest earnings, with Agricultural Bank of China Ltd on Tuesday reporting stunted profit growth and a spike in bad loans.

Rising bad loans and struggling profit growth show how China's most international bank is vulnerable to a slowing domestic economy, projected by the country's leaders to grow by around 7 per cent this year.

BoC saw impairment losses on assets weigh in at 48.4 billion yuan at year-end, an over 100 perncent increase from 23.5 billion yuan the year before.

The bank's non-performing loan ratio also rose sharply to 1.18 per cent, versus 1.07 per cent in the preceding quarter, the biggest jump in over three years.

While BoC is central to government plans to internationalize the yuan - most recently becoming the first yuan clearing bank in Sydney - its profit from overseas business indicates it is still very much a domestic lender. "Our strategy is not to seize business abroad, the main point is to serve domestic customers," said a senior loan officer at BoC previously, who was not authorised to speak with media and so declined to be identified.

BoC did not response to repeated calls for comment.

BoC's shares in Hong Kong closed 0.2 per cent lower ahead of the earnings release, compared with a 0.5 per cent rise in the benchmark Hang Seng Index.

China Construction Bank Corp and Industrial and Commercial Bank of China Ltd are set to post annual earnings later in the week.

REUTERS