BOCHK predicted to be a "niche player" in the ASEAN region

It's used by BOC for regional expansion.

It has been noted that BOCHK will be used as the entity for BOC to expand into ASEAN after a recent announcement that BOC's ASEAN assets will be transferred into BOCHK.

According to a research note from Barclays, BOC later clarified that other international expansion plans beyond ASEAN will remain under BOC directly.

BOC targets profits from its overseas business to account for 40% of group profit in 5 years vs. 23% in 2014 and targets to lend US$100bn in support of China's "One Belt, One Road" strategy over the next three years with US$20bn in 2015.

Here's more from Barclays:

BOCHK's competitive advantage: BOCHK's competitive edge over other Mainland and regional banks to finance "One Belt, One Road" opportunities, in our view, include: 1) its sizable USD, HKD and CNH funding base; 2) its status as a RMB clearing bank; 3) its extensive experience in international banking; and 4) the client referrals from its parent. Regulatory processes are also relatively more straightforward in Hong Kong than in China.

ASEAN to drive growth going forward: We expect BOCHK to become a niche player in the ASEAN region in the near term, targeting large corporate customers to finance infrastructure projects related to "One Belt, One Road" opportunities and the wealth of overseas Chinese retail customers.

While large infrastructure loan margins could be lower than other types of loans, strong volumes and low NPLs in the near- to medium-term could drive profitability and ROEs higher.