Bank of China 2007 net profit up 31%

Bank of China (BOC)<601988><3988>, one of China's four state-owned commercial banks, on Tuesday reported its 2007 net profit increased a better-than-expected 31% to RMB 56.3 billion, up from RMB 43.8 billion in 2006.

The state-owned lender, which started investing in subprime assets six year ago, was hardest hit by the U.S. mortgage credit crisis among Asian lenders. The bank held US$4.99 billion of subprime investments at the end of 2007, down from US$10.6 billion a year earlier. It said it booked US$1.58 billion in provisions and markdowns on the holdings.

The bank expects slow growth in lending in 2008, as the Chinese government is gearing up to rein in the credit. In addition, its loan growth is estimated to ease to 12% this year.

Dominic Chan, a Hong Kong-based analyst at CLSA Asia-Pacific Markets, noted that Chinese banks' profit growth will slow to approximately 10% in 2008.