Bank of China Limited : Bank of China President : Partial Interest-Rate Liberalization Won't Hurt Spread
06/27/2012| 01:17am US/Eastern
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By Jenny W. Hsu
TAIPEI--Bank of China Ltd. (3988.HK) President Li Lihui said Wednesday that China's recent relaxation of controls on interest rates "won't affect its spread" and is an important step toward interest-rate liberalization.
Earlier this month, the People's Bank of China allowed banks to offer rates to depositors of up to 110% of the benchmark deposit rate and provide loans of at least 80% of the benchmark lending rate. Some analysts said the partial liberalization of the interest-rate regime would likely hurt Chinese banks' margins.
Speaking to reporters after a ceremony celebrating the bank's opening of its first branch in Taiwan, Mr. Li said BOC remains cautious about lending to "high-risk sectors" such as property developers and government-financed vehicles.
The credit quality of some Chinese companies is "problematic" but those companies are in the minority, Mr. Li said.
He said the BOC's current nonperforming loan ratio is about 1%.
Write to Jenny W. Hsu at jenny.hsu@dowjones.com
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