According to a report published by Citibank, the Bank of China's operating profit before provision for the first quarter was 106.7 billion yuan, down 5.2% from year to year. The net profit growth after tax was slightly better than expected, but it still fell 2.9% year-on-year to 56 billion yuan, which is equivalent to a forecast of 24.8% for the full year, mainly due to increased provision expenses. The return on shareholders' equity was 9.9%, down 118 basis points from year to year. According to the report, the main positive news included steady growth in loans, 4.6% quarterly and 12.4% year-on-year, mainly driven by local loans. Deposits grew 5.2% quarterly and 10% year-on-year. In terms of asset quality, the non-performing loan ratio fell by 3 basis points to 1.24% from quarter to quarter. Credit costs remained good, capital adequacy ratio improved, maintaining its “buy” rating, with a target price of HK$4.21.

The bank believes that the market has high expectations for the increase in operating profit before the Bank of China's provision because it estimates that overseas business supports better net interest margin performance, but both the net interest spread trend in the first quarter and the increase in operating profit before provision disappointed the market.