Glonghui, May 13 | According to a research report published by DBS, the Bank of China's performance in the first quarter was in line with expectations. Net profit fell 2.9% year-on-year, and the non-performing loan ratio fell by 5 basis points at the end of December last year, then fell 3 basis points quarterly at the end of the first quarter. This is the biggest decline among state-owned banks. It is expected that improved asset quality and lower credit costs will support their profit growth. About 19% of the Bank of China's assets are denominated in foreign exchange, making the year-on-year decline in net interest spreads less than the performance of peers last year. However, DBS believes that with the end of the upward cycle of interest rates of the Federal Reserve and the rise in interest rates on foreign exchange deposits, the upward trend in net interest spreads is expected to end within this year, and the related advantages may weaken. DBS expects the BOC's compound annual profit growth rate of 2.3% for the 2023-2026 fiscal year. It believes that in the face of uncertainty about China's economic outlook and global interest rates may remain at a high level for a long time, the Bank of China will provide diversified overseas investment opportunities, continue to attract capital inflows in the short term, and reaffirm the “buy” rating. The target price will be raised from HK$3.7 to HK$3.9. However, considering the downward pressure on earnings this year, DBS also lowered the Bank of China's profit forecast for 2024 to 2025 by 3% to 4%.