Bank of China (BoC; 3988.HK, 601988.SH) beat expectations by reporting a 26% year-on-year increase in profit to US$11.87 billion for 2009, the Wall Street Journal reported. Analysts anticipate a continued improvement in profit this year due to stronger borrowing demand and a likely interest rate hike. Much of BoC’s 2009 income derived from a surge in lending as part of efforts to stimulate the economy – it extended new local currency loans worth US$171.4 billion, increasing its outstanding loans by 50% from the end of 2008. The bank’s capital adequacy ratio dropped to 11.14% from 13.43% at the end of 2008. BoC is targeting a lending increase of just 17% this year, compared to 50% in 2009. The bank also announced plans to set up a rural banking joint venture with Temasek Holdings, the Singaporean sovereign wealth fund, which will operate 40-60 branches. Bank of China (Hong Kong) (2388.HK), which is majority-owned by BoC, said its full-year net profit quadrupled to reach US$1.77 billion.
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