BOC profits up after offsetting subprime impact
Updated: 2008-02-19 09:37
Bank of China (BOC), the largest holder of subprime-related assets in the country, will report a "visible increase" in 2007 net profits despite the crisis influence, Chairman Xiao Gang said on Monday.
Despite increasing pressure from the deepening US subprime crisis, the bank remained confident.
"We are actively bettering our subprime-related portfolio, and selling the comparatively risky part at an appropriate time," Xiao said.
The outstanding subprime investment of the lender by year end was scaled down further from the third quarter.
The bank put away completely its collateralized debt obligations (CDO) related to US subprime in the fourth quarter, and set aside plenty of reserves for losses from other subprime-related bonds, Xiao said.
His statement sounded more confident compared with the bank's announcement late last month that annual profits would "keep increasing" in 2007. This was released to refute previous reports estimating substantial profit loss or even bank deficit because of its subprime holdings.
The outstanding non-performing loans were also reduced in the fourth quarter, although the figure increased slightly among the state-owned banks as a whole, Xiao said.
The bank is releasing a detailed report on May 25, giving information of its subprime investment.
The bank's reports for the first three quarters showed it held $7.45 billion worth of subprime mortgage bonds through September, taking up 2.86 percent of its securities investment.
The related CDO was worth $496 million.
Two other major listed banks, the Industrial and Commercial Bank of China and the China Construction Bank, also estimated 2007 net profit increases.
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