BOCHK reveals write-back in loan loss provisions in 3Q13

NPL ratio held on at 0.26%.

According to Maybank Kim Eng, the NPL ratio stayed at 0.26% in Jun 2013, partly due to the classification of some performing loans to NPLs (for companies with weakening financial positions). 

With improvement in the financial positions of these companies, BOCHK reported a write-back in loan loss provisions in 3Q13.

Here's more from Maybank Kim Eng:

The operating environment of these customers should continue to improve in 4Q13. We maintain our credit cost forecast at 5-6bps during 2013-14.

Pending approval, BOCHK will adopt an advanced internal-rating based approach to assess its CAR in 2014. For every 10% reduction in the risk-weight of its corporate loans, we estimate that its core tier-1 CAR will increase by 70bps.

With continued strong capital position, we expect BOCHK should be able to sustain its dividend payout ratio at 60-70%
during 2013-15.