Bank of China, the Chinese bank worst hit by the sub-prime lending crisis, says that it is well-positioned to manage further deterioration in the sub-prime mortgage market and is on track to report marked profit growth for 2007.

The bank, which will unveil its 2007 financial performance next month, said that it has sufficient provisions to cover its shrinking sub-prime portfolio, according to Reuters. It is the largest holder of US sub-prime securities in Asia.

The chairman of China's third-largest bank told reporters at a forum today that marked profit growth would be revealed next month.

“We have noticed the sub-prime market is worsening, but I want to say that our sub-prime portfolio has improved greatly," Xiao Gang, the chairman, told reporters. “Under the pre-condition of prudent accounting, we have set aside sufficient provisions for all our sub-prime holdings.”

He said that the bank had disposed of all its sub-prime-related collateralised debt obligations in the fourth quarter. At the end of June last year, those holdings were $682 million.

The bank has reported that its exposure to sub-prime-linked securities at the end of September was $7.95 billion (£4 billion), well down on the $9.65 billion reported at the end of August.

Shares in the BOC were suspended by the Shanghai stock exchange last month after the company was accused of failing to comment on a report in the South China Morning Post that it could announce a significant writedown on these securities. The bank later said that it would report a post-tax profit increase for 2007.

The chairman also said today that he wanted to invest in a Chinese life insurer by the end of the year and had entered into discussions with several parties.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive