Bank of America expects BOC to Underperform

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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.

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