Bank of China's 1Q15 net profit slightly increases to RMB45.8 bn

Fee income had declined year-on-year.

Bank of China reported 1Q15 net profit of RMB 45.8bn, +1% y/y and slightly below Barclays' expectation as fee income declined y/y.

According to a research note from Barclays, however, it reiterates its OW rating on BOC as it believes the bank will benefit the most from its overseas exposure, which is greater than that of its peers, when developed economies recover.

In addition, BOC could play a key role in the "One Belt, One Road" national strategy, said Barclays.

Here's more from Barclays:

Profit growth slowed y/y due to a high base effect: BOC reported 1Q15 net profit of RMB 45.8bn, up 1% y/y and slightly less than our expectations due to declining fee income (-16% y/y) on a high base set in 1Q14. 1Q15 NIM was 2.22%, flat q/q. We believe BOC's domestic business margin rose slightly, as BOCHK's NIM narrowed q/q.

Asset quality trend in line with large peers: The NPL ratio rose 15bps q/q to 1.33%, largely in line with the pace of large peers. Credit cost was 0.64% in 1Q15, down 13bps y/y but up 27bps q/q. Loan loss coverage declined 21ppts to 167% at end-1Q15.

Good deposit and loan growth: BOC's deposits rose 6.2% q/q driven by balanced growth from domestic and overseas businesses. Total loans grew by 3.8% q/q, driven by domestic RMB loans that expanded 4.6% q/q. The reported LDR was 71.8% as of 1Q15.

Solid capital position: After the conversion of convertible bonds and issuance of preferred shares in the domestic market, BOC's capital position was strengthened. Its core tier 1 and tier 1 ratios reached 10.87% and 11.85%, up 26bps and 50bps q/q, respectively.