Bank of China Issuer Summary

Report date: 2026-05-18
Issuer: Bank of China Limited
Ticker / stock codes: BCHINA, HK 03988, SH 601988
Sector: Chinese banking
Primary credit focus: Issuer credit, senior debt, non-capital TLAC, Tier 2, AT1 / perpetuals, and risk differentiation across bonds issued by overseas branches and subsidiaries

1. Business Snapshot and Recent Developments

Bank of China Limited (“BOC”) is a major state-owned commercial bank with mainland China as its core market and a G-SIB deeply embedded in China’s financial system. It should not be viewed simply as a domestic retail bank, nor as a policy bank itself. Rather, it is best analysed as a deposit-led universal banking group spanning corporate banking, personal banking, financial markets, overseas commercial banking, BOCHK, investment banking, insurance, leasing and asset management. The starting point for credit analysis is that BOC, as one of China’s major state-owned banks, benefits from systemic importance and a high likelihood of government support, while also carrying the complexity associated with China’s most internationalised bank, including foreign currency operations, cross-border settlement, overseas branches and subsidiaries, Hong Kong and Macao, and aircraft leasing.

At end-2025, the BOC group had total assets of RMB38.36tn, customer loans of RMB23.45tn, customer deposits of RMB26.18tn and equity attributable to shareholders of RMB3.06tn. By the end of 2026 Q1, total assets had expanded to RMB39.59tn, customer loans to RMB24.45tn and customer deposits to RMB27.17tn. According to the 2025 annual report, BOC operates in mainland China and 64 overseas countries and regions, has offices in 45 Belt and Road participating countries and regions, and has been designated as the RMB clearing bank in 16 countries and regions. It serves more than 8.4mn corporate customers and 550mn personal customers, while BOCHK and the Macao branch are also local note-issuing banks. This international footprint is an important strength that differentiates BOC from other large Chinese state-owned banks, but it also requires investors to distinguish claims and support expectations across offshore issuers, overseas branches, BOCHK and BOC Aviation.

BOC was ranked fourth in The Banker’s Top 1000 World Banks ranking, as cited in the 2025 annual report, and has been continuously designated as a G-SIB since 2011. In its 2026 Q1 Pillar 3 disclosure, BOC was classified as G-SIB bucket 2 and D-SIB bucket 4, with the higher additional capital requirement of 1.50% applied. This indicates that BOC is treated as a systemically important bank not only in China but also internationally. For issuer credit, this systemic importance and the likelihood of government support are the largest credit supports. However, being a G-SIB and a major state-owned bank is not the same as an explicit guarantee by the Chinese government on individual bonds. This distinction is important throughout this report.

The 2025 to 2026 Q1 performance appears stable to slightly improved at the headline level. Operating income in 2025 was RMB659.9bn, up 4.28% year on year, and profit attributable to shareholders was RMB243.0bn, up 2.18% year on year. In 2026 Q1, operating income was RMB178.8bn, up 8.44% year on year, and profit attributable to shareholders was RMB56.6bn, up 4.17% year on year. Net interest income also increased by 7.81% year on year in 2026 Q1. This suggests that the revenue momentum that had weakened from 2024 to 2025 has at least not broken down in the short term.

That said, this should not be read immediately as a structural improvement in earnings. BOC’s NIM declined from 1.59% in 2023 to 1.40% in 2024 and 1.26% in 2025, and remained at 1.26% in 2026 Q1. ROA fell from 0.80% in 2023 to 0.75% in 2024, 0.70% in 2025 and an annualised 0.63% in 2026 Q1, while ROE declined from 10.12% in 2023 to 9.50% in 2024, 8.94% in 2025 and an annualised 8.46% in 2026 Q1. BOC’s credit profile should therefore be read not as that of a bank with strong earnings growth, but as that of a bank absorbing low NIM, policy-driven credit supply, and property and household credit risks through its very large deposit base, capital, liquidity and systemic importance.

On capital, the MOF investment in 2025 is important. According to the shareholder table in the 2026 Q1 report, Central Huijin Investment Ltd. held 58.59% and the Ministry of Finance of the People’s Republic of China held 8.64% as of 31 March 2026. The lock-up period for the A shares issued to the MOF is stated as five years from 17 June 2025. This confirms that BOC is an issuer capable of receiving capital reinforcement as a major Chinese state-owned bank. However, this capital support is equity-level support and does not mean that the government directly guarantees principal and interest payments on existing bonds.

Asset quality is stable at the headline level. At end-2025, the NPL ratio was 1.23%, allowance coverage was 200.37%, and the special-mention loan ratio was 1.47%. At end-2026 Q1, the NPL ratio edged down to 1.22%, while allowance coverage rose to 203.17%. Looking only at these numbers, there are few signs of rapid deterioration in issuer credit. However, in the underlying mix, the NPL ratio for the real estate sector was high at 6.26% at end-2025, and personal consumption loans, personal business loans and credit cards also had elevated NPL ratios. Pressure from China’s property sector and household credit is not enough to break BOC’s senior credit immediately, but in a low-NIM environment it will erode the earnings buffer.

Two misreadings should be avoided in an initial credit view. First, BOC cannot be viewed as risk-free simply because it is close to the Chinese government. The likelihood of government support is very important, but senior, non-capital TLAC, Tier 2, AT1 / perpetuals, and bonds issued by overseas branches and subsidiaries have different loss-absorption ranking and legal claims. Second, BOC should not be oversimplified as vulnerable solely because China has a property problem. Total assets, deposits, capital, LCR / NSFR, G-SIB designation and government shareholders are very strong, and the probability of a rapid change in senior issuer credit over a short period is low. For investors, the key is to separate strong senior issuer credit from the risks specific to subordinated securities, overseas issuers and subsidiary debt.

2. Industry Position and Franchise Strength

BOC’s franchise is particularly characterised by international and foreign-currency business among China’s major state-owned banks. In addition to its very large deposit and lending base in mainland China, it has Hong Kong, Macao, overseas branches, BOCHK, RMB clearing, trade finance, foreign exchange and cross-border settlement capabilities. This gives it a somewhat different credit structure from a purely domestic retail and corporate lending bank, even within the major state-owned banking group. This is a strength. Overseas customers, foreign-currency funding, global transaction banking, RMB internationalisation and BOCHK’s Hong Kong franchise broaden the issuer’s revenue sources and funding access. At the same time, overseas regulation, sanctions, geopolitics, foreign-currency liquidity, country credit, and the legal separation of subsidiaries and branches complicate the analysis.

In China’s domestic banking market, BOC is one of the major state-owned banks alongside ICBC, CCB, Agricultural Bank of China and Bank of Communications. These banks carry out financial intermediation for China itself through deposits, payments, corporate banking, personal banking, local government and infrastructure finance, government bond investment, and credit provision to policy-priority sectors. BOC’s customer deposits of RMB27.17tn at end-2026 Q1 exceeded customer loans of RMB24.45tn. A simple loan-to-deposit calculation gives a ratio of approximately 90%, indicating that very large lending is supported by the deposit base. Unlike banks that rely heavily on market funding, this deposit base is the first line of defence for senior credit.

The composition of deposits is also important. Of the RMB27.17tn in customer deposits at end-2026 Q1, corporate deposits were RMB12.95tn and personal deposits were RMB13.45tn. Personal deposits accounted for the larger increase from end-2025, rising by RMB629.1bn. The depth of personal deposits strengthens funding stability, while the shift into time deposits and sticky deposit costs can also constrain NIM. BOC’s deposits should therefore be read both as “large and therefore strong” and as “a credit support whose cost structure needs to be monitored in a declining-spread environment”.

BOC’s domestic business is strongly linked to national strategy. The annual report repeatedly refers to the “five major tasks” of technology finance, green finance, inclusive finance, pension finance and digital finance. In 2025, BOC strengthened credit supply to areas including government finance, infrastructure, science and technology, green finance, foreign trade and foreign investment, the new development model for real estate, agriculture / rural areas / farmers, coordinated regional development, livelihood-related sectors and consumption. From a credit perspective, this policy linkage has two sides. On the positive side, it demonstrates that BOC is indispensable to the financial system and policy implementation, raising the likelihood of government support and its regulatory importance. On the negative side, lending is influenced not only by pure risk-return considerations but also by policy objectives, which may lead to the accumulation of low-yielding, long-duration and countercyclical support-type assets.

International business is a BOC-specific strength. BOC is China’s historical core bank for foreign exchange and trade finance, with operations in 64 overseas countries and regions, RMB clearing bank designation in 16 countries and regions, and note-issuing functions at BOCHK and the Macao branch. This is not merely a matter of the number of overseas offices. It is a franchise deeply connected to Chinese companies’ overseas expansion, RMB internationalisation, Hong Kong as a financial centre, trade finance and cross-border cash management. For capital market investors, BOC is also a visible foreign-currency bond issuer through overseas branches and MTN programmes.

However, this international footprint should not be treated as an unconditional strength. BOCHK has a strong Hong Kong franchise, but legally it is a separate bank and listed group, and the parent-subsidiary relationship is a separate issue from legal protection for BOCHK creditors. Claims on BOC parent bonds and BOCHK bonds are not the same. BOC Aviation is an aircraft leasing company, and its relationship with the BOC group may support market access and support expectations, but this report has not verified any parent guarantee, keepwell undertaking or contractual liquidity support. It also carries separate risks relating to aircraft assets, airline credit, leases, residual values and order books. Even when bonds issued by overseas branches are branch debt of BOC itself, investors need to review governing law, tax, payment currency, sanctions, regulation in the branch jurisdiction and practical payment mechanics. BOC’s franchise is broad, but investors’ claims do not automatically extend across that breadth in the same way.

In short, BOC’s industry position can be described as “the most internationalised major state-owned G-SIB at the core of China’s financial system”. This is a major support for senior credit, but it also brings policy roles, overseas / foreign-currency / subsidiary structures, TLAC and capital instruments, and sovereign linkage.

3. Segment Assessment

For credit analysis, it is useful to distinguish BOC’s business into corporate banking, personal banking, financial markets and investments, and overseas / integrated operating subsidiaries. The segment assessment in this report is not a precise reallocation of operating income by business line, but a framework for organising sources of credit risk and business functions. The credit strength of the bank as a whole is not determined by the profits of a single segment; deposits, loans, investments, capital, liquidity and government support operate together. Even so, distinguishing which areas support deposits, payments and customer access, and which areas are more likely to generate credit costs, capital consumption, interest-rate and market risks, and subsidiary / jurisdictional risks, helps clarify BOC’s strengths and constraints.

Corporate banking is the segment that most clearly demonstrates BOC’s systemic importance. At end-2025, mainland China corporate loans stood at RMB14.26tn, diversified across commerce and services, manufacturing, transportation / storage / postal services, electricity / heat / gas / water, real estate, construction and public-related sectors. In 2025, manufacturing loans reached RMB3.23tn, up 18.19% year on year. Loans to electricity, heat, gas and water also increased to RMB1.43tn, up 12.38% year on year. This shows that BOC is expanding credit in line with policy-priority sectors and support for the real economy. From a credit perspective, this strengthens the franchise, government linkage, and deposit and payment relationships, while low-yielding, long-duration and policy-driven lending can pressure NIM and RWA.

The clearest constraint within corporate banking is real estate. At end-2025, mainland China loans to the real estate sector were RMB966.8bn, or 4.13% of total loans, which appears manageable based only on the balance ratio. However, the NPL ratio was high at 6.26%, deteriorating from 4.94% in 2024. The NPL amount was RMB60.5bn, the largest among the major industries. BOC supports the real estate financing coordination mechanism, the new real estate development model, rental housing and affordable housing, but this means it remains engaged with the sector through policy-driven restructuring rather than avoiding it. Credit investors should not be reassured by the real estate exposure ratio alone; they should continue to monitor the NPL ratio, modifications, collateral, project-level cash flow and provisioning adequacy.

Personal banking supports both the deposit base and the revenue base. Residential mortgages, personal consumption loans, personal business loans and credit cards are affected by household income, property prices, consumer sentiment and SME cash flow. At end-2025, residential mortgages were RMB3.98tn, with an NPL ratio of 0.60%, broadly flat from 0.61% in 2024. By contrast, personal consumption loans were RMB515.7bn with an NPL ratio of 2.18%, personal business loans were RMB1.04tn with an NPL ratio of 1.95%, and credit cards were RMB486.0bn with an NPL ratio of 2.18%. These clearly generate credit costs more readily than residential mortgages. When China’s consumption, employment and SME conditions are weak, BOC’s personal banking is both a source of stable deposits and a monitoring item for retail credit costs.

Financial markets and investments connect earnings, liquidity, regulatory capital and interest-rate risk. Financial investments were RMB9.66tn at end-2025 and increased to RMB10.03tn at end-2026 Q1. As a major state-owned bank, BOC holds large amounts of government bonds, policy bank bonds and high-quality liquid assets, supporting LCR and NSFR. In a declining-rate environment, bond valuations and disposal gains may supplement earnings. However, these are different in nature from loan-deposit spreads. Interest-rate risk, accounting classification, liquidity regulation and unrealised gains and losses in the securities portfolio are important for assessing earnings quality when NIM is declining.

Overseas and integrated operating subsidiaries best illustrate BOC’s distinguishing features. BOCHK, BOC International, BOC Insurance, BOC Financial Leasing, BOC Aviation, BOC Wealth Management and BOC Consumer Finance broaden the BOC group’s business scope. At end-2025, loans to Hong Kong, Macao, Taiwan and other countries and regions were RMB3.12tn, with an NPL ratio of 1.56%, improving from 1.73% in 2024. This indicates that overseas and Hong Kong-related asset quality is not deteriorating one-way. However, this report has not sufficiently verified the granular details by country, industry or collateral type. Hong Kong commercial real estate, foreign-currency liquidity, sanctions, geopolitics, overseas branch regulation, and the relationship between BOCHK and BOC parent remain monitoring items for future reviews.

The main loan categories and NPL ratios at end-2025 are as follows.

Source: 2025 Annual Report.

As a segment assessment, corporate banking demonstrates systemic importance and policy linkage, but contains real estate, construction and local government-related risks. Personal banking supports the deposit base and customer interface, but carries credit costs in consumption, personal business and card lending. Financial markets and investments provide liquidity and earnings supplementation, but carry interest-rate, accounting and market risk. Overseas and integrated operating subsidiaries are BOC-specific differentiators, but require a clear distinction between legal claims and support expectations. Based on this overall picture, BOC’s credit strength is not supported by the profitability of one business line, but by a structure in which very large deposits and systemic importance absorb a wide range of risks.

4. Financial Profile and Analysis

BOC’s financial profile combines a very large balance sheet, a strong deposit base, deep liquidity, sufficient capital, stable headline NPL ratios and declining profitability. The figures from 2025 to 2026 Q1 indicate that the issuer is far from near-term repayment or refinancing stress, while also showing that NIM and ROA / ROE have declined, reducing the earnings buffer available to absorb the same asset risks.

Key financial and credit indicators are as follows. 2026 Q1 figures are unaudited quarterly figures; ROA / ROE are annualised; LCR is the quarterly daily average disclosed under Pillar 3; and NSFR is the period-end value.

Source: 2025 Annual Report, 2026 Q1 Report, 2026 Q1 Pillar 3 Disclosure Report.

NIM is the most important earnings metric. BOC’s NIM declined from 1.59% in 2023 to 1.26% in 2025. This is likely affected by falling lending rates across the Chinese banking sector, mortgage rate adjustments, policy-driven low-rate credit provision, deposit costs and changes in asset mix. Net interest income increased by 7.81% year on year in 2026 Q1, but NIM itself remained at 1.26%. Therefore, the Q1 increase in NII may include the effect of loan and investment balance growth and base effects, and cannot yet be described as a structural recovery in spreads.

The credit implication of low NIM lies less in short-term payment capacity and more in loss-absorption capacity and internal capital generation. BOC generates more than RMB200bn of annual net profit, but ROA has fallen from 0.70% to an annualised 0.63% in 2026 Q1, while ROE has declined into the 8% range. Senior debt still has an ample buffer, but for Tier 2 and AT1, the combination of lower NIM and credit costs becomes more important.

Asset quality is stable on the surface. At end-2025, NPLs were RMB288.0bn and the NPL ratio was 1.23%, slightly improved from 1.25% at end-2024. At end-2026 Q1, NPLs increased to RMB297.0bn, but the NPL ratio edged down to 1.22%. Allowance coverage was 200.37% at end-2025 and 203.17% at end-2026 Q1, indicating sufficient provisioning against headline NPLs. The special-mention loan ratio was also 1.47% at end-2025, unchanged from end-2024.

However, the headline NPL ratio does not fully capture BOC’s risk. At end-2025, the NPL ratio for loans to the real estate sector was 6.26%, deteriorating from 4.94% at end-2024. The NPL amount was RMB60.5bn, making it the largest problem among individual industries. Residential mortgages had a low NPL ratio of 0.60%, but the balance is large at RMB3.98tn and is affected by household income, housing prices, prepayments and interest-rate repricing. Personal consumption loans, personal business loans and credit cards each had NPL ratios of around 2%, and in a low-NIM environment these credit costs cannot be ignored.

For BOC’s asset quality, the key issue is not only loans to the real estate sector, but also how weakness in the property market spills over into construction, commerce and services, households, personal businesses and local government-related projects. The annual report states that BOC supported the real estate financing coordination mechanism and worked to mitigate local government-related debt risks. This is positive for financial stability, but it also means the bank has a role in absorbing risks over time for policy reasons. Even if the NPL ratio is flat, investors need to monitor modifications, repayment deferrals, low-rate refinancing, Stage 2 loans, special-mention loans and provisioning assumptions.

Capital is sufficient, but the scope for improvement should not be overstated. At end-2025, the CET1 ratio was 12.53% and the total capital ratio was 18.85%; at end-2026 Q1, the CET1 ratio was 12.18% and the total capital ratio was 18.23%. Under Pillar 3, BOC’s minimum CET1 requirement is 5%, and even including the 2.5% capital conservation buffer and the 1.5% G-SIB / D-SIB additional requirement, there is a degree of headroom in CET1. However, the CET1 ratio fell by 0.35 percentage points in Q1, reflecting the impact of RWA growth accompanying loan and investment expansion. If policy-driven credit supply continues and NIM remains low, capital ratios will depend not only on retained earnings, but also on risk-asset management, dividends, capital instrument issuance and support from government shareholders.

Liquidity is strong. In the 2026 Q1 Pillar 3 disclosure, LCR was 144.67%, NSFR was 127.59%, and the leverage ratio was 7.32%. These levels have ample room above regulatory requirements. The increase in customer deposits to RMB27.17tn, including growth in personal deposits, shows that BOC has payment capacity that does not depend on short-term market funding. Liquidity risk is low in BOC parent’s RMB deposit base. By contrast, foreign-currency liquidity, overseas branches, Hong Kong, MTNs, dollar bonds and subsidiary issuers require separate analysis of currency, jurisdiction, market access and sanctions risks.

In conclusion, BOC has very high resilience as a senior issuer credit. Deposits, capital, liquidity, the likelihood of government support and G-SIB designation are clear supports. At the same time, profitability is declining, and NIM and ROA / ROE constrain credit improvement. The NPL ratio is stable, but investors should not take comfort without reviewing the details of real estate, consumer loans, personal business loans, cards, and overseas / Hong Kong-related exposures. Investors need to read both the stability of headline indicators and the underlying tension in earnings and asset quality.

5. Structural Considerations for Bondholders

For BOC bondholders, the most important structural point is that claims are not the same even when the Bank of China name is used. BOC parent senior debt, overseas branch debt, non-capital TLAC, Tier 2, AT1 / perpetuals, BOCHK debt, BOC Aviation debt, and other subsidiary / SPV debt differ in issuer, ranking, loss absorption, support expectations, regulatory treatment and governing law. BOC as an issuer credit is strong, but in individual securities investment, investors need to verify how much of that strength reaches each security.

BOC parent senior credit is supported by very large deposits, capital, liquidity and the likelihood of government support. However, the government shareholders, G-SIB designation and capital reinforcement identified in the annual report and Pillar 3 disclosures do not constitute a legal guarantee by the Chinese government for senior debt. Non-capital TLAC may look close to senior in normal times, but in a G-SIB resolution it is an instrument designed to absorb losses. The 2026 Q1 Pillar 3 disclosure shows an external TLAC ratio of 26.25% and a TLAC leverage ratio of 11.26%. TLAC improves the resolvability of the issuer group, but for TLAC investors themselves it is also a risk product for which loss-absorption ranking, resolution clauses, issuer, governing law and triggers must be verified. This report has not sufficiently reviewed individual TLAC documentation, and therefore does not draw security-specific conclusions.

Tier 2 and AT1 / perpetuals require even more caution. In the capital instrument disclosures in the annual report, BOC’s write-down-type undated capital bonds rank in liquidation behind depositors, general creditors and more senior subordinated debt, but ahead of shares. Interest is non-cumulative, and the bank has the right to cancel interest. Even if BOC has a high probability of remaining viable, capital instruments are affected by regulatory discretion, PONV, loss absorption, non-call risk and market repricing.

Overseas branches, BOCHK and BOC Aviation should not be equated with parent senior bonds. Overseas branch debt is often close to parent credit, but branch location, governing law, tax, sanctions, foreign-currency remittance and payment mechanics must be checked. BOCHK is an important subsidiary with a Hong Kong franchise and RMB clearing function, but it is legally separate as a licensed bank in Hong Kong, and the relationship with the BOC parent and protection for BOCHK creditors are not the same issue. BOC Aviation is an aircraft leasing company related to the BOC group, and that relationship may support market access and support expectations, but this report has not verified any guarantee, keepwell undertaking or contractual liquidity support. It also carries separate exposure to airline credit, aircraft values, order books, lease contracts, insurance and sanctions risk.

The main issues by security class are as follows.

Based on this structure, an investment decision on BOC requires more than asking whether “BOC is strong”. Investors need to check “which Bank of China bond”, “which jurisdiction and issuer”, “which ranking” and “which regulatory treatment” apply. This report focuses on issuer credit, while leaving individual bond terms as pending items.

6. Capital Structure, Liquidity and Funding

BOC’s capital, liquidity and funding strongly support senior issuer credit. At end-2026 Q1, the CET1 ratio was 12.18%, the Tier 1 ratio was 13.92%, the total capital ratio was 18.23% and the leverage ratio was 7.32%. Under the Pillar 3 disclosure, even after considering the 5% CET1 minimum requirement, 2.5% capital conservation buffer and 1.5% G-SIB / D-SIB additional requirement, CET1 has sufficient headroom. The CET1 ratio declined from end-2025 to Q1, but this was mainly because RWA increased from RMB20.93tn to RMB21.87tn, and does not indicate a short-term capital shortage.

At end-2026 Q1, CET1 capital was RMB2.66tn, Tier 1 capital was RMB3.04tn and total capital was RMB3.99tn. The 2025 A-share issuance to the MOF is important evidence of the likelihood that government shareholders will participate in capital reinforcement for major state-owned banks. However, a capital injection is a means of reinforcing equity capital and is not an explicit guarantee for bonds. Capital instrument investors should also recognise that government support does not always protect their own security class, and that capital instruments may absorb losses when necessary.

Liquidity is strong. In the 2026 Q1 Pillar 3 disclosure, HQLA was RMB6.68tn, net cash outflows were RMB4.62tn, LCR was 144.67% and NSFR was 127.59%. At end-2025 as well, LCR was 150.60% and NSFR was 127.75%, giving BOC a large defence against market funding closure or deposit outflow stress.

The deposit base is the largest support. Customer deposits were RMB27.17tn at end-2026 Q1, up RMB989.4bn from end-2025. Corporate deposits were RMB12.95tn and personal deposits were RMB13.45tn. Deposits at major state-owned banks are stickier than market funding during credit stress and are also linked to the financial stability policies of the government and regulators. At the same time, the size of the deposit base also constrains NIM. If deposit costs, time-deposit migration and policy-driven lending rate cuts continue, profitability may not grow easily even with a strong deposit base.

Foreign-currency liquidity remains a pending item in this report. BOC has foreign-currency assets and liabilities, overseas branches, BOCHK, access to the MTN market and foreign-currency bonds. Foreign-currency LCR, maturities by major currency, liquidity stress by overseas branch and the response to a closure of the US dollar market have not been sufficiently verified. BOC parent’s RMB deposit liquidity is strong, but for foreign-currency bond investment, investors should review differences in currency, regulation and jurisdiction.

Overall, BOC’s capital, liquidity and funding have sufficient depth to support senior issuer credit at a high investment-grade level. The main weakness is not a liquidity shortfall, but internal capital generation if low NIM and policy-driven credit supply persist for a long time. Short-term payment capacity is strong, but long-term capital efficiency, foreign-currency liquidity and loss-absorption ranking for TLAC / subordinated securities require continued monitoring.

7. Rating Agency View

BOC’s international ratings are based on a combination of the standalone bank profile and the likelihood of Chinese government support. BOC’s official Credit Rating page shows, as of 11 April 2025, S&P long-term counterparty credit rating of A, short-term A-1, standalone credit profile of a-, and Stable outlook; Moody’s long-term foreign-currency deposit rating of A1, short-term P-1, BCA of baa1, and Negative outlook; and Fitch long-term IDR of A, short-term F1+, Viability Rating of bbb, and Stable outlook. The Reuters report carried via MarketScreener confirmed that Moody’s revised China’s sovereign A1 outlook back to Stable from Negative on 27 April 2026, but this report did not directly access Moody’s issuer-specific primary release for Bank of China.

This report uses the A / A1-level ratings as supporting evidence that BOC’s senior issuer credit is treated by markets and regulators as a high investment-grade credit. It does not make definitive statements on support notching, outlook changes or subordinated security notching until the detailed rating agency reports are reviewed. BOC’s support expectation is analysed based on government shareholders through Huijin and MOF, systemic importance as a G-SIB / D-SIB, capital reinforcement through the MOF investment, and the gap between standalone credit strength and support-inclusive ratings; it is not confirmation of a legal guarantee. In particular, Fitch’s Viability Rating of bbb indicates that standalone credit strength is lower than the support-inclusive IDR, supporting the view that part of BOC’s strength depends on the likelihood of government support.

The rating agency view and this report’s credit assessment align in recognising high resilience in senior issuer credit. Given deposits, capital, LCR / NSFR, G-SIB designation, the Huijin and MOF shareholder base, and policy importance, it is reasonable to treat BOC’s senior credit as high investment grade. At the same time, ratings alone cannot fully price declining NIM, real estate NPLs, retail credit, foreign-currency liquidity, BOCHK / BOC Aviation / overseas branches, and loss absorption in TLAC / Tier 2 / AT1.

When using ratings, issuer credit and individual security credit must be separated. Even if government support is incorporated in the rating, this is not a legal government guarantee. This report has not reviewed live spreads, bond prices or same-maturity comparisons with Chinese sovereign bonds or peer major state-owned banks, and therefore does not make a specific relative-value call.

8. Credit Positioning

BOC’s credit positioning should distinguish between senior credit of a major state-owned bank close to the Chinese sovereign and bank-specific asset risk and subordinated security risk. In senior credit, BOC belongs to the same group of major Chinese state-owned banks as ICBC, CCB, Agricultural Bank of China and Bank of Communications. Given G-SIB bucket 2 status, A / A1-level ratings, very large deposits, deep liquidity, government shareholders and policy importance, this is an entirely different credit from an ordinary private commercial bank, Chinese property-related financial company or regional bank.

Within the major Chinese state-owned banking group, BOC’s defining feature is its internationalised franchise in foreign currency and Hong Kong. Operations in 64 overseas countries and regions, RMB clearing bank designations, BOCHK, foreign-currency and trade finance, and overseas branch debt are differentiators, and many of the bonds actually purchased by investors involve overseas branch, foreign-currency, jurisdictional and subsidiary structures. BOC is therefore a core credit supported by the Chinese sovereign and the major state-owned banking framework, but it is also an issuer that should be assessed alongside geopolitics, sanctions, Hong Kong property, foreign-currency liquidity, and the standalone risks of BOCHK and BOC Aviation.

This report has not reviewed live spreads, CDS, bond prices or same-maturity curves. It therefore makes no specific buy, sell, cheap or rich assessment. Based only on public information, the credit positioning is that senior BOC is a core high-investment-grade credit within the major Chinese state-owned banking group; non-capital TLAC, Tier 2 and AT1 are supported by the same issuer credit but should clearly price loss-absorption ranking; and BOCHK and BOC Aviation have group relationships but should be treated as separate issuers and separate risks for which guarantee, liquidity support and legal claims need to be checked individually.

9. Key Credit Strengths and Constraints

BOC’s credit strength combines very strong institutional support with constraints from declining profitability, real estate, retail credit and the complexity of internationalisation. Strengths include G-SIB bucket 2 status, government shareholders through Huijin at 58.59% and the MOF at 8.64%, customer deposits of RMB27.17tn at end-2026 Q1, LCR of 144.67%, NSFR of 127.59%, CET1 ratio of 12.18%, total capital ratio of 18.23%, and allowance coverage above 200%. These strongly support the floor for senior issuer credit.

At the same time, the constraints are clear. NIM declined from 1.59% in 2023 to 1.40% in 2024 and 1.26% in 2025, and remained at 1.26% in 2026 Q1. The real estate sector NPL ratio was high at 6.26% at end-2025, and NPL ratios for personal consumption loans, personal business loans and credit cards were around 2%. Policy-driven credit supply demonstrates BOC’s systemic importance, but it may increase low-yielding, long-duration and countercyclical support-type assets, affecting NIM, RWA, capital efficiency and future credit costs. The overseas and foreign-currency franchise is a strength, but it also brings sanctions, geopolitics, Hong Kong property, foreign-currency liquidity and the legal separation of subsidiaries and branches.

Combining the strengths and constraints, BOC is “a major Chinese state-owned bank with very strong deposits, capital, systemic importance and international franchise, but requiring continued monitoring of low NIM, real estate and household credit, policy-driven credit supply, the complexity of internationalisation, and loss-absorbing securities”. Senior credit has high resilience. For subordinated securities and subsidiary / overseas branch debt, investors must verify not only the issuer name but also claim ranking and legal structure.

10. Downside Scenarios and Monitoring Triggers

BOC’s downside scenarios are more likely to emerge through a combination of low NIM, real estate and household credit, local government-related debt, policy-driven credit supply, capital consumption and the sovereign outlook than through a sudden deposit outflow or short-term liquidity crisis. The probability of rapid deterioration in senior issuer credit over a short period is low, but subordinated securities and foreign-currency bond spreads may react before headline NPL ratios deteriorate.

The first downside risk is a prolonged decline in NIM. Even if net interest income increased year on year in 2026 Q1, as long as NIM remains at 1.26%, it is difficult to describe this as a structural recovery. The second is simultaneous deterioration in real estate and household credit. The real estate sector NPL ratio of 6.26% is already high, while mortgages, personal consumption loans, personal business loans and credit cards are sensitive to household income, consumption, employment and SME business conditions. The third is a scenario in which long-term refinancing or modification of LGFV and local government-related debt affects NIM, asset turnover, RWA and profitability. The fourth is a scenario in which BOC-specific internationalisation risks such as the sovereign / government support assessment, foreign-currency liquidity, sanctions and geopolitics, and Hong Kong property spill over into foreign-currency bonds and subsidiary / branch debt.

The main monitoring items are as follows.

In practice, investors should focus on combinations rather than a single indicator. Even if the NPL ratio is flat, credit headroom narrows if NIM falls, impairment increases, special-mention loans rise and CET1 declines at the same time. Conversely, if NIM stabilises, deterioration in real estate and personal credit stops, CET1 and LCR / NSFR remain high, and sovereign and bank ratings remain stable, BOC’s strong senior issuer credit is confirmed.

11. Credit View and Monitoring Focus

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.

By security class, senior, non-capital TLAC, Tier 2, AT1 / perpetuals, BOCHK / BOC Aviation / overseas branches need to be clearly distinguished. Senior credit is strongly supported by the issuer’s deposits, capital, liquidity and likelihood of government support. Non-capital TLAC may appear close to senior in normal times, but in resolution it absorbs losses, and TLAC investors need to verify ranking, resolution clauses and jurisdiction. Tier 2 has stronger capital characteristics, while AT1 / perpetuals require investors to incorporate non-cumulative coupons, interest cancellation, write-down, non-call risk and PONV. BOCHK and BOC Aviation have group relationships, but unless guarantee or contractual liquidity support is verified, they are not the same as BOC parent debt.

Conditions for an improved credit view would include NIM stabilising or recovering from around 1.26%, net interest income improving without relying only on balance growth, the real estate sector NPL ratio and personal credit NPLs peaking out, impairment losses not absorbing profit growth, the CET1 ratio remaining in the 12% range, and LCR / NSFR and the deposit base being maintained at high levels. Deterioration conditions would include renewed NIM decline, higher impairment, deterioration in real estate, consumer loans, personal business loans and cards, LGFV-related stress, a lower CET1 ratio, deterioration in the sovereign or bank rating outlook, and simultaneous emergence of foreign-currency liquidity or geopolitical risk.

In conclusion, BOC is “a major Chinese state-owned bank with very strong deposits, capital, liquidity, systemic importance and a BOC-specific international franchise, while requiring continued monitoring of low NIM, real estate and household credit, policy-driven credit supply, and complexity across overseas, foreign-currency and security-class structures”. Senior debt has high resilience. For non-capital TLAC, Tier 2, AT1 / perpetuals, BOCHK, BOC Aviation and overseas branch debt, investors should not take too much comfort from the same Bank of China name, and must clearly separate issuer, ranking, loss absorption, jurisdiction and the legal nature of support.

Short Summary & Conclusion

Bank of China is a major state-owned G-SIB at the core of China’s financial system. Its very large deposit base, closeness to the government through Huijin and MOF, deep capital and liquidity, and franchise as China’s most internationalised bank strongly support senior issuer credit. At the same time, declining NIM, real estate sector NPLs, personal consumption loans, personal business loans, cards, policy-driven credit supply, and the complexity of overseas / foreign-currency / subsidiary structures define the ceiling on credit improvement. Senior debt has high resilience, but for non-capital TLAC, Tier 2, AT1 / perpetuals, BOCHK, BOC Aviation and overseas branch debt, investors need to clearly distinguish loss-absorption ranking and legal claims even when the same Bank of China name is used.

Sources

Company and primary sources

• Bank of China Limited, 2025 Annual Results Announcement / full 2025 Annual Report text, published 2026-03-30.
  https://www.bankofchina.com/en/investor/ir2/202603/t20260330_25657340.html
• Bank of China Limited, Report for the First Quarter ended 31 March 2026, published 2026-04-29.
  https://www.bankofchina.com/en/investor/ir3/202604/t20260429_25663883.html
• Bank of China Limited, 2026 Q1 Pillar 3 Disclosure Report, published 2026-04-29.
  https://www.bankofchina.com/en/investor/ir2/202604/t20260429_25663882.html
• Bank of China Limited, Credit Rating page, updated 2025-04-11 / accessed 2026-05-18.
  https://www.bankofchina.com/en/investor/ir4/201311/t20131114_2637906.html

Rating, regulatory and supplementary sources

• Reuters via MarketScreener, Moody's revised China's sovereign outlook to Stable and affirmed A1, published 2026-04-27.
  https://www.marketscreener.com/news/moody-s-flags-resilience-in-china-s-economy-revises-outlook-to-stable-ce7f59dcde8ef723
• IMF, People’s Republic of China: 2025 Article IV Consultation, Staff Report, published 2026; used only as supplementary macro / property-sector background.
  https://www.elibrary.imf.org/view/journals/002/2026/044/article-A001-en.xml

Unverified or pending items

• Moody's 2026 issuer-specific Bank of China rating action or outlook update primary release was not directly accessible in this pass. The report therefore uses the BOC official rating page and treats subsequent China sovereign outlook information as context, not as proof of an issuer-specific BOC outlook change.
• Live bond spreads, CDS, trading prices and same-maturity comparison versus China sovereign, ICBC, CCB, Agricultural Bank of China, Bank of Communications and BOCHK were not checked. This report therefore does not make a live relative-value call.
• Individual offshore senior note, MTN, non-capital TLAC, Tier 2 and AT1 / perpetual documentation was not fully reviewed. Specific investment decisions require the relevant offering circular, pricing supplement, trust deed, PONV / resolution terms, tax clauses, cross-default provisions and governing-law review.
• Granular exposure to LGFV, individual property developers, borrower-level restructuring, collateral, province-level risk and overseas branch-level liquidity was not available from the reviewed public sources.