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RETAIL BANKING | Staff Reporter, China
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BOC's edge over other banks revealed

The key is more diversified income sources.

According to Nomura, the two rate cuts earlier this year had an impact of around 1.5bp on the bank’s NIM, based on their own estimation. Currently, over 50% of loans and deposits have been repriced, and management expects that the impact in 4Q12 and 1Q13 will not be significant and that NIM will likely remain stable.

Here's more from Nomura:

Actually, BOC reported a 6bp q-q improvement in 3Q12 NIM (thanks to reduction in high-cost funding and maintaining domestic lending yield at 6.82%). BOC has the largest overseas exposures among peers (>20% of total assets), where most assets are already priced at market rate. Therefore, it would be less impacted from interest rate liberalization among peers, in our view.

More diversified income sources stand out amid slower loan growth
BOC has the most diversified income sources among peers. In 9M12, non-interest income accounted for 30% of total operating income, the highest among peers.

BOC attributed the higher percentage of noninterest income to more diversified intermediary businesses including insurance, air leasing, and foreign exchange transactions.

Besides, BOC’s less focus in traditional loan-related fee income like commitment fee and consultation fee would lead to less impact on the bank amid slower loan growth, which in turn places BOC in a better position in fee income business in the long term, according to the management.  

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