Yuan volatility plays out in Bank of China and Bank of China (Hong Kong) results

Bank of China and its Hong Kong arm saw mixed blessings from yuan volatility in the first half as the gap in profitability widened between the two lenders.

BOC's profit hit 90.7 billion yuan, up just 1.14 per cent compared to the same time last year. Meanwhile, Bank of China (Hong Kong) said its profit climbed by 10.8 per cent in its latest set of interim results.

Like its peers after successive rate cuts, net interest margin was down at BOC by 9 basis points to 2.18 per cent compared to a year ago. At the same time, the bank notched a 23 basis-point increase in its non-performing loan ratio, still below the industry average of 1.5 per cent.

BOC is one of the Chinese banks with the highest exposure to overseas assets, which has buoyed returns during this year's slowdown. Some 27 per cent of the bank's 16 trillion yuan total assets are outside the mainland. As the Chinese economy cools and the nation's companies and investors look to diversify overseas, BOC has been able to capture both overseas deposit and loan demand.

These have been growing at clips of 8.2 and 5.8 per cent at the bank, pushing profits derived from its overseas strategy to 4.65 per cent, which has a sizeable 22.91 per cent weight in the group's overall profit.

Relative to its peers, balance-sheet expansion at the bank has also been moderate. Total assets are only up 6.87 per cent from the end of 2014.