Bank of China (BOC), the largest holder of subprime-related
assets in the country, will report a "visible increase" in 2007 net
profits despite the crisis influence, Chairman Xiao Gang said on
Despite increasing pressure from the deepening US subprime
crisis, the bank remained confident.
"We are actively bettering our subprime-related portfolio, and
selling the comparatively risky part at an appropriate time," Xiao
The outstanding subprime investment of the lender by year end
was scaled down further from the third quarter.
The bank put away completely its collateralized debt obligations
(CDO) related to US subprime in the fourth quarter, and set aside
plenty of reserves for losses from other subprime-related bonds,
His statement sounded more confident compared with the bank's
announcement late last month that annual profits would "keep
increasing" in 2007. This was released to refute previous reports
estimating substantial profit loss or even bank deficit because of
its subprime holdings.
The outstanding non-performing loans were also reduced in the
fourth quarter, although the figure increased slightly among the
state-owned banks as a whole, Xiao said.
The bank is releasing a detailed report on May 25, giving
information of its subprime investment.
The bank's reports for the first three quarters showed it held
$7.45 billion worth of subprime mortgage bonds through September,
taking up 2.86 percent of its securities investment.
The related CDO was worth $496 million.
Two other major listed banks, the Industrial and Commercial Bank
of China and the China Construction Bank, also estimated 2007 net
(Xinhua News Agency February 19, 2008)