BOC asset quality stable, improves in H1

The asset quality of the Bank of China Ltd was stable and improved in the first half of this year, with its nonperforming loan ratio falling 0.16 percentage points from the end of last year to 1.3 percent at the end of June.

Over the same period, the large State-owned commercial lender's balance of nonperforming loans dropped by 6.93 billion yuan ($1.07 billion) to 200.35 billion yuan. The balance of its special-mention loans, potentially weak loans that may spark unwarranted credit risks, also declined by 29.24 billion yuan to 235.35 billion yuan, according to its 2021 interim results announcement released on Monday.

"The overall asset quality of BOC was further consolidated, especially as its domestic institutions stepped up efforts to dispose of nonperforming loans. Both of its corporate banking and retail banking businesses realized a decrease in NPLs," said Liu Jiandong, chief risk officer of BOC, at an online news conference on Monday.

Compared with its domestic institutions, the bank's overseas institutions faced higher pressure on asset quality due to the complexity and uncertainties in the external environment. By the end of June, its balance of loans and NPL ratio overseas increased slightly from the end of last year, Liu said.

"New NPLs overseas mainly occurred in the industries that were continuously and significantly affected by the COVID-19 pandemic, such as the real estate and aviation industries, but the overall risk remains controllable. In the second half, the overall asset quality of our bank is expected to achieve a stable performance while securing progress at the same time," he said.

The BOC will further consolidate the asset quality of its overseas institutions, ramp up the disposal of NPLs, and adopt different risk management strategies in different countries and regions to improve the actual effect of risk management. It also will strengthen efforts to prevent, control and defuse risks in major areas, conduct comprehensive risk screening regularly, make adequate allowance for loan impairment losses and keep optimizing its credit structure, he said.

In the first half, the bank made an all-out effort to serve the real economy, the part of a country's economy that produces goods and services. It intensified support for major areas, including inclusive finance, green finance, strategic emerging industries and the manufacturing industry, in addition to supporting new infrastructure and new urbanization initiatives and major projects, said Lin Jingzhen, executive vice-president of the bank.

By the end of June, its corporate loans in renminbi and foreign currencies in the Chinese mainland totaled 7.16 trillion yuan, up 9.72 percent from the end of last year.

BOC listed green finance as one of its key areas of development during China's 14th Five-Year Plan period (2021-25). Its balance of green credit exceeded 1 trillion yuan at the end of June. The bank also assisted clients in issuing 50.9 billion yuan of green bonds in the domestic market in the first half.

"We plan to provide no less than 1 trillion yuan of funds to support green industries during the 14th Five-Year Plan period. We also will strive to increase the proportion of the balance of domestic green corporate loans in the balance of domestic corporate loans by no less than 5 percentage points from the end of the 13th Five-Year Plan period (2016-20), or even 10 percentage points at our best," said Liu Jin, vice-chairman and president of the bank.