Bank of China - H We think the sell-off is overdone

Research evidence excerpt

Bank of China - H We think the sell-off is overdone

inflated domestic trading volume by RMB 4.488 billion by guiding internal employees and

customers to “buy and sell immediately” with frequent trades. Two financial enterprises, in pursuit of bond underwriting scale or

market rankings, sold bonds below the issuance price—accepting losses totaling RMB 242 million by giving up the price

spread—in exchange for an increase of RMB 363.111 billion in underwriting volume.

Two state-

Audit findings on #2 Weak risk management. On risk control, the NAO said there were weak links and multiple businesses operating in violation

owned banks

state-owned of rules.

and one

assets of 1) Irregular concealment or disposal of non-performing assets totaling RMB 63.441 billion. This was mainly done by setting ultra-

financial

financial long grace periods without downgrading classifications, lowering original loan interest rates to reduce repayment amounts, and

holding

enterprises. issuing new loans to replace original NPL assets, thereby artificially concealing NPLs. There were also practices such as

company

violating write-off procedures and “competitive selection” principles, repurchasing issued NPL-disposal projects at “zero

consideration,” and making directed transfers of NPL assets to parties designated by local governments—constituting false or

non-compliant NPL disposal.

2) The institutions also carried out irregular credit business totaling RMB 67.616 billion. For example, one financial enterprise

from 2021 to August 2025 illegally issued RMB 1.517 billion in personal business loans to more than 150 individuals who did not

meet qualification requirements; illegally issued RMB 2.812 billion in residential mortgage loans to projects such as those