Glonghui, Feb. 21 | J.P. Morgan Chase released a report stating that the Mainland's quoted interest rate (LPR) for loans with a term of 5 years or more was unexpectedly lowered by 25 basis points, and the net interest spread of the Bank of China is expected to drop by an average of 3 basis points next year. The bank mentioned that since this year, Bank of China H shares have outperformed the Hang Seng Index by 10 percentage points, while BOC A shares have also outperformed the Shanghai and Shenzhen 300 Index by 11 percentage points. Although the unexpected reduction in LPR was bad for the Bank of China, it will not reverse its excellent performance since this year. Because the market is uncertain about macroeconomic growth, the dividend ratio is a key driver of BOC's performance, and the latest 5-year LPR cut should not affect the Bank of China's dividend last year, and the impact on this year's dividend is limited. Therefore, the bank reiterated the view that the Bank of China will continue to outperform the index in the first half of this year. Among the domestic banks covered by the bank, the unexpected reduction in the 5-year LPR may have more negative effects on the net interest spreads of CCB and the Postbank next year, and will cause the Postbank's revaluation rating to be suspended. As for the next potential catalyst, it is the quarterly results to be revealed at the end of next month.