Bank of China saw a 28 per cent rise in earnings for the first half, helped mostly by increased income from lending and a drop in the proportion of bad loans. 

For the six months to 30 June 2011, net interest income went up 20 per cent from the year-earlier period to RMB110.22 billion, while non-interest income from credit cards, wealth management sales and international trade-related transactions grew 36 per cent to RMB55.76 billion. Net profit for the January to June half reached RMB66.51 billion, from RMB52.01 billion in the past year. 

The positive results shrugged off a generally bearish outlook among investors, owing to BOC's large exposure to foreign currency-denominated securities. The BOC is majority-owned by the Chinese goverment, but it has one of the largest exposures overseas among Chinese banks. As of 30 June, the bank records $83.31 billion in foreign currency-linked securities, with foreign-linked assets totalling $346 billion, or about 20 per cent of its total assets. With the power of the RMB rising over the last few months, the wide exposure to foreign currency took a heavy toll on its first half figures. 

Bad debts also stalled the bank's rise, as BOC records around $1.7 trillion in liabilities mostly from local government credit. To date, the bank has set aside RMB12.8 billion in the first half to cover potential bad debts. On the up side, the proportion of all kinds of bad loans had dropped to 1 per cent by 30 June, from 1.1 per cent at the end of 2010.

Despite the volatility, the market still focused on news of an earnings increase. Shares went up 1.33 per cent on closing in Hong Kong to HK$3.05 each. Its subsidiary, BOC Hong Kong, also saw a 6.6 per cent increase in share value to HK$20.80.