Good times are rolling once more for Bank of China's overseas business

It also resulted in stronger NIM.

Bank of China’s 1H14 earnings were up 11.15% to RMB89.7b, beating the consensus estimate of RMB88.6b.

According to a research note from CCB International, key drivers were improved NIM at its overseas operations, improved yield from renminbi bond investments and better operating cost control.

In the first quarter of this year, BOC management forecast the NIM of its foreign business would soon bottom out, and it is now seen that BOC’s overseas business will again become a driver of growth.

Here's more from CCB International:

BOC’s group provisioning level is lower than peers. Credit cost in 1H14 rose 30bp YoY to reach 69bp, higher than the level in FY10-13 (29-32bp).

There is now more pressure from NPLs as the new NPL formation ratio rose 93bp (annualized) after adding back NPL disposals, write-offs and cash recoveries.

Asset growth in Hong Kong was 1.9% HoH. For non-Hong Kong overseas operations, this figure was 34.8% HoH.

There are two reasons for the large discrepancy: (1) BOC leveraged its franchise in the overseas renminbi business in Singapore, London, Paris and Luxemburg; and (2) it took advantage of global low-cost funding by offshore bond issuances.

We expect the non-Hong Kong overseas business to maintain strong growth momentum due to BOC’s global expansion.