Healthy profits for Bank of China despite of high exposure to sub-prime
The Bank of China has the highest exposure to the US sub-prime mortgage credit crisis among Asian banks but has announced a 31% increase in 2007 net profit.
The bank posted a net profit of 56.3 billion yuan (£4 billion), up from 43.8 billion yuan in 2006 and better than expectations.
The state-owned bank said it held $5 billion worth of related asset-backed securities at the end of 2007, or 2.13% of its investment securities and booked $1.58 billion in provisions and markdowns on the holdings.
However, the bank said that it believed it had booked sufficient provisions and did not expect to incur further losses if it unloads its sub- prime related holdings.
The country’s surging economy boosted the banks profits, which are in sharp contrast to the losses at many western lenders. However, it is believed Chinese banks will face a challenging 2008 as Beijing imposes curbs on lending and takes other action aimed at heading off resurgent inflation.
Shares in the bank have fallen recently on concerns that its exposure to assets based on sub-prime loans would cost it billions. Earlier this year, shares in the bank were suspended and it was forced to issue a statement dismissing concerns about sub-prime related losses.
Visited 1559 times, 1 so far today
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.