The Bank of China (BOC), the nation's second largest bank, has said its overall performance and financial results will be unaffected by the cases of irregularities and violations of rules revealed in last year's government audit.

The National Audit Office found some BOC branches had failed to strictly adhere to the government's macro-economic controls and the bank's own credit approval policies, the bank said in a statement on Monday.

The investigation into the bank's 2005 financial status, carried out between April and September last year, also revealed insufficient mortgages were required for some note transactions due to inadequate checks, and some branches failed to work in accordance with the financial assessment norms, according to the BOC statement.

The audit identified risks in a small number of highway construction loans and said the bank's disposal of non-performing loans needed improvement.

The lender said problems uncovered mostly dated back to prior to the bank's shareholding reforms in 2004, adding the majority of loans involving compliance breaches had been recovered, disposed or settled, and preparations had been made in previous years for deduction of the other non-performing loans.

The bank said it had already tightened its control over mortgages in note transactions, and had adjusted its accounting rules by the end of 2006 to better regulate its financial assessments.

The National Audit Office said the report of the BOC audit finding would be publicly available sometime after July.

China's state-owned banks have been repeatedly asked to improve internal controls and risk management before public listing.

Source: Xinhua