Bank of Communications: Net Interest Margin Stabilizes on Higher Asset Yield

First-half 2023 revenue and net profit growth of 4.8% and 4.5%, respectively, at the Bank of Communications, or BoCom, were largely in line with our expectation. Net interest margin, or NIM, is declining—as are peers—but at a much lesser 2 basis points in the second quarter from the first quarter as the bank was able to allocate more funds to higher-yield foreign currency bonds. While we expect pressures to remain, we believe BoCom's ongoing asset and liability mix optimization and the June deposit rate cut will help deliver relatively steady NIM.