BOC’s Reported Strong Fee Income as Its Wealth Management Business Thrived

Narrow-moat Bank of China, or BOC, reported 7.1% and 12.3% year-on-year growth in revenue and net profits, with net profit growth largely flat while revenue growth accelerated from the 6.3% growth for the first three quarters. Similar to other state-owned enterprise banks, the results highlighted stabilizing net interest margin and credit quality improvement. In addition, BOC’s year-on-year fee-income growth posted the strongest recovery to 7.8% since 2015, driven by its booming wealth management business. We attributed its advantage in wealth management to a huge, quality retail customer base, and strong growth in bank wealth management product scale in 2021. We believe BOC’s average customer is wealthier than other big four peers, as total assets managed by BOC’s private bank accounted for 20% of the bank’s retail assets under management, or AUM. Such proportion was higher than close peers. BOC managed to expand the size of its bank wealth management product by 23% from 2020 to CNY 1.71 trillion, in contrast to a 4.5% decline for ICBC. By leveraging the synergies of the group’s financial subsidiaries, BOC has established a reputed brand for wealth management. Retail AUM exceeded CNY 11 trillion, with wealth management revenue growing 33% from 2020. Growth in number of VIP customers and AUM both reached the highest level for the past three years.