[ET Net News Agency, 19 April 2018] Credit Suisse assumed coverage on Bank of China
(BOC)(03988) with an 'outperform" rating, and adjusted its taret price to HK$4.9 (from
HK$5.6).
The research house adjusted its FY2018-19 by 10%. Its positive view on BOC is predicated
on its large USD loan exposure (20% of loan book) that should benefit from better demand
and higher USD rates.
Credit Suisse said BOC's flattish PPoP in 2017 was largely due to higher base in 2016 on
gains from Nanyang Commercial Bank stake sale, while BOC's underlying core earnings were
better than the peers. Yet, with the base effect and rising USD rates, Credit Suisse
believes BOC's core earnings to keep in pace with that of other large banks in 2018.
Management expects asset quality improvement to continue into 2018, though the extent of
improvement could be a bit less visible than domestic peers as its overseas credit has
already seen very low NPL ratio. Still, Credit Suisse expects BOC to report lower credit
cost of 65 bp, or maintain one of the lowest among Big 4 banks in 2018. (KL)