S&P gives Bank of China Macau A

S&P said it assigned its A long-term issuer credit ratings to Bank of China Ltd. Macau Branch (BOCM) with a stable outlook.

“In our view, BOCM is a core subsidiary of BOC. We therefore equalize the ratings on BOCM with those on BOC.

“BOCM will continue to have healthy capital buffers to absorb losses, in our view. We expect the bank's risk-adjusted capitalization (RAC) ratio to remain between 11% and 14%. We have not considered any capital injection and assume no dividend payout. The RAC ratio stood at 12.4% at end-June 2023, largely flat from the 12.3% at end-2022.

“BOCM is likely to pick up its loan growth over the next two years to mid-to-high single digits, following a rebound in Macao's economy post-Covid. We believe BOCM's net interest margin (NIM) will remain below that of domestic and global peers over the next two years. This is largely due to the bank's focus on collateralized retail lending,” S&P said in a statement.

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