Bank of China Hong Kong stays resilient with buffer against CRE risks

S&P anticipates moderately slower asset growth.

Bank of China (Hong Kong)’s profitability is expected to remain resilient, with its strong capitalization cushioning it from commercial real estate (CRE) risks, says S&P Global Ratings.

The bank’s return on average assets is forecasted to increase slightly to 0.9% in 2026 from 1.0% in 2024.

S&P also anticipates moderately slower asset growth will continue to help preserve the bank's capital buffer.

BOCHK, like the rest of the Hong Kong banking sector, faces sectorwide pressure from its exposure to local CRE.

As of 31 December 2024, its nonperforming loan (NPL) ratio was 1.05% and its stage 2 loan ratio was 2.04%, worsening from 1.04% and 1.23%, respectively, from a year earlier.

However, BOCHK’s non-performing loan (NPL) ratio remained well below the industry average of 1.96% because a decline in impaired overseas loans mitigated an increase in impaired Hong Kong CRE loans, S&P said.

S&P forecasts the bank’s NPL ratio to average 1.15% over 2025 to 2026.

Meanwhile, BOCHK had reduced its CRE exposures in Hong Kong and mainland China to 15.3% and 5.1% of total loans as of end-2024, from 16.6% and 5.5%, respectively.

NPL provision coverage was adequate at 85%, in S&P’s view.