Bank of China Limited (BCHINA_BOCGRI)

BOC’s current senior issuer credit is at a level that has high-investment-grade resilience as a major Chinese state-owned bank. Its very large deposit base, systemic importance as a G-SIB, closeness to the government through Huijin and MOF, sufficient CET1 and total capital, allowance coverage above 200%, deep LCR and NSFR, and its franchise as China’s most internationalised bank strongly support the issuer’s repayment and refinancing capacity. The credit direction is broadly stable. Profit, deposits and loans increased from 2025 to 2026 Q1, but declining NIM, real estate sector NPLs, personal consumption loans, personal business loans, cards and policy-driven credit supply constrain improvement. The probability of rapid deterioration in senior issuer credit over a short period is low, but subordinated securities and foreign-currency bond spreads may move first in response to the sovereign outlook, a renewed NIM decline, deterioration in real estate and household credit, foreign-currency and geopolitical risks, and repricing of TLAC / capital instruments.

The core supports for this credit profile are deposits, capital, liquidity and the likelihood of government support. Customer deposits of RMB27.17tn, CET1 ratio of 12.18%, total capital ratio of 18.23%, LCR of 144.67% and NSFR of 127.59% at end-2026 Q1 provide a large defence against normal banking stress. Huijin’s 58.59% holding, the MOF’s 8.64% holding, G-SIB bucket 2, D-SIB bucket 4, capital reinforcement through MOF investment, and support-inclusive ratings above standalone credit strength indicate that BOC is indispensable to China’s financial system. These are strong supports for senior credit. However, government shareholders, systemic importance and rating support are not the same as a legal government guarantee for individual bonds.

The main constraints are low NIM, real estate and household credit, policy-driven credit supply, and the complexity of internationalisation. NIM declined from 1.59% in 2023 to 1.26% in 2025 and remained at 1.26% in 2026 Q1. ROA and ROE are also declining. The real estate sector NPL ratio was high at 6.26% at end-2025, and personal consumption loans, personal business loans and credit cards also had NPL ratios around 2%. Lending expansion into policy-priority sectors demonstrates BOC’s systemic importance, but it may pressure RWA and capital efficiency. The overseas and foreign-currency franchise is a strength, but it also brings additional issues involving Hong Kong, BOCHK, BOC Aviation, overseas branches, foreign-currency liquidity, sanctions and geopolitics.