Bank of China:FY15attributable earnings fall 2%

PPOP was weaker sequentially (-4% QoQ) and 5% below our forecast on 1)slightly lower net interest income growth, which was due to slower IEA growththan we had forecast while NIMs were in line, and 2) volatility in the quarterlyinsurance numbers (not disclosed in 3Q15). Credit costs were more in line.

Asset quality stable with NPLs at 1.43% (flat QoQ / +25bp YoY), coverageat 153%, and SMLs of 2.51% (+14bp YoY). The trend is similar, albeit slightlyless rosy, for domestic NPLs which reached 1.77% (1bp HoH / +30bp YoY)and domestic SMLs of 3.02% (+20bp HoH / +16bp YoY) as at 4Q15.

Dividend yield at 6.6%. The bank announced a dividend of RMB0.175 pershare, 3% higher than our forecast as the payout ratio (31%) was slightlyhigher than the bare minimum 30% that we had assumed. CET1 closed theyear at 11.10% (+39bps QoQ / 49bps YoY) as CET1 (+4% QoQ / +12% YoY)accrued more rapidly than RWAs (+0.3% QoQ / +7% YoY).