Bank of America expects BOC to Underperform


Bank of America sees Bank of China (03988) under performing the market, cutting its target price from HKD3.91 to 3.84.

BoA notes that BOC’s net profits rose by 2.6% in 2016, falling short of projects by 3 – 4% due to provision increases in the fourth quarter of last year.

BoA has dialled down its 2017 and 2018 earnings projections for BOC by 1 – 2%.

It notes that while the Q4 net interest spread remained better than the sector average, holding steady at 1.75%, and net interest income rose by 1.7% over the preceding quarter, net transaction income fell by 2.3% quarter-on-quarter and 4% year-on-year.