Bank of China (BoC; 601988.SH, 3988.HK) posted a first-quarter net profit of US$3.84 billion, up 41.2% year-on-year, on the back of aggressive lending, Reuters reported. BoC’s loan book expanded by 8.2% during the quarter as Chinese banks extended US$380.8 billion in new loans, boosting outstanding loans by 24%. Following the massive US$1.4 trillion in new loans last year, the government is expected to tighten liquidity as part of efforts to cool economic growth and head off inflation. This, combined with BoC’s plans to issue new shares, will likely lead to slower growth for the rest of the year. Beijing has already instructed banks to set aside more cash as reserves, tighten mortgage lending and rein in loan growth. BoC has won shareholder approval to sell new shares worth up to 20% of its existing market capital and issue as much as US$5.86 billion in convertible bonds.
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