BoC's fourth quarter profit plummets 59%

Bank of China (BoC) said its fourth quarter net profit dropped 59% year-on-year to US$646.8 million as the global economic crisis hit the lender’s overseas investments, the Wall Street Journal reported. The bank’s full-year income rose by 14% to US$9.4 billion. The fourth quarter decline – following a 32% gain in the first nine months of the year – indicates that a slowing domestic economy at home and abroad are beginning to affect Chinese lenders. BoC has US$2.59 billion invested in US subprime securities, the largest investment by any Asian financial institution, and has set aside US$2.25 billion to cover potential losses. Although it expects a challenging 2009, the bank reaffirmed its commitment to expanding overseas. BoC President Li Lihui said the bank’s purchase of a 20% stake in French private bank Compagnie Financiere Edmond de Rothschild will likely soon be approved by Chinese regulators.