Rate adjustment not to hurt Bank of China
By Su Bei (China Daily)
Updated: 2005-07-23 13:18

Bank of China said on Friday that the changes in the renminbi exchange rate would not have a substantive negative impact on its earnings.

The central bank on Thursday strengthened the renminbi exchange rate to 8.11 to the US dollar, up from 8.28 per cent. However, more than 40 per cent of the bank's assets, which stood at 4.5 trillion yuan (US$560.3 billion) at the end of June, were foreign currencies.

Meanwhile, the bank won a US$22.5 billion capital injection from the State in late 2003.

Spokesperson Zhou Ning said the bank has strong capabilities in both market operation and risk management.

It has already taken effective measures to avoid risks and to maintain the value of the foreign currencies, she said.

In fact, the bank recorded fast growth in both operating profit and net profit during the first half of this year, Zhou said.

But she declined to provide detailed figures.

Those figures have yet to be audited and need to be submitted to the board of directors first, she said.

The bank's unaudited operating profit rose 11.56 per cent during the first half of this year. Bank officials also did not release capital adequacy ratio figures for the first half of this year. Its capital adequacy ratio was 10.04 per cent at the end of last year.

By the end of June, the bank's non-performing credit rate declined to 4.38 per cent, from 5.12 per cent at the end of last year, Zhou said.

According to spokesman Wang Zhaowen, the bank is still talking with a number of strategic investors on a stakes sale before its initial public offering, but nothing has been decided yet.

Domestic banks including Bank of China and China Construction Bank pin high hopes on foreign strategic investors in their on-going share-holding reforms. They believe the investors can help bring in global expertise and management, as well as much-needed capital.

China Construction Bank has already signed agreements with Bank of America and Temasek Holdings (Private) Limited on forging strategic partnerships.

Last month, the Swiss-based bank UBS announced it was in talks with Bank of China to buy a stake in what is China's largest foreign exchange lender.

The UBS was talking with Bank of China with a view to forming a mutually beneficial co-operation partnership, the Swiss-based bank said.

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