Bank of China Ltd. :BACHY-US: Earnings Analysis: Q3, 2017 By the Numbers : November 8, 2017

Bank of China Ltd. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Bank of China Ltd. – China Minsheng Banking Corp., Ltd. Unsponsored ADR Class H, Industrial and Commercial Bank of China Limited Unsponsored ADR Class H, Bank of Communications Co., Ltd. Unsponsored ADR Class A, China Construction Bank Corporation Unsponsored ADR Class H, Bank of America Corporation and mBank SA Unsponsored ADR (CMAKY-US, IDCBY-US, BCMXY-US, CICHY-US, BAC-US and BREJY-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 17,689.81 million, Net Earnings of USD 6,268.52 million.
  • Net loan assets changed 8.84% compared to same period last year and 3.46% from previous period, total deposits changed 7.08% compared to same period last year and 2.83% from previous period.
  • Earnings grew despite decline in operating margins and pre-tax margins compared to same period last year.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 17689.81 17552.89 19026.19 17117.53 16245.03
Revenue Growth (%YOY) 8.89 -19.16 0.82 -8.09 -14.29
Earnings (mil) 6268.52 8313.69 6772.11 4357.41 6266.82
Earnings Growth (%YOY) 0.03 17.04 -4.97 -29.13 -3.18
Net Margin (%) 35.44 47.36 35.59 25.46 38.58
EPS 0.53 0.71 0.58 0.37 0.53
Return on Equity (%) 2.72 3.72 3.11 2.01 2.89
Return on Assets (%) 0.87 1.19 1.01 0.66 0.94

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Market Share Versus Profits

Revenues History
Earnings History

BACHY-US’s change in revenue this period compared to the same period last year of 8.89% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that BACHY-US is holding onto its market share. Also, for comparison purposes, revenues changed by 0.78% and earnings by -24.60% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s improvement in net interest income margins was influenced by both the relative increase in the levels of net loan assets and the level of total deposits as a percentage of equity. On an absolute basis, net loan assets changed 8.84% compared to the same period last year and 3.46% from the previous period. Total deposits changed 7.08% compared to the same period last year and 2.83% from the previous period.


Despite a decline in operating’s margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for Bank of China Ltd.

Company Profile

Bank of China Ltd. engages in the provision of banking and related financial services such as commercial and investment banking and insurance and investment services. The company operates its business through the following segments: Corporate Banking, Personal Banking, Treasury Operations, Investment Banking, Insurance, and Others. The Corporate Banking segment offers services to corporate customers, government authorities, and financial institutions such as current accounts, deposits, overdrafts, loans, custody, trade related products and other credit facilities, foreign currency, and derivative products. The Personal Banking segment provides services to retail customers such as current accounts, savings, deposits, investment savings products, credit and debit cards, consumer loans, and mortgages. The Treasury Operations segment deals in foreign exchange transactions, customer-based interest rate and foreign exchange derivative transactions, money market transactions, proprietary trading, and asset and liability management. The Investment Banking segment includes debt and equity underwriting and financial advisory, sales and trading of securities, stock brokerage, investment research and asset management services, and private equity investment services. The Insurance segment specializes in the underwriting of general and life insurance business and insurance agency services. The Others segment comprises investment holding and other miscellaneous activities. The company was founded on February 5, 1912 and is headquartered in Beijing, China.

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