This is what makes BOC unique among all of China's commercial banks

25% of its assets are outside China.

According to Bernstein Research, Bank of China is unique among all of China's commercial banks in that it has a sizeable franchise overseas. At the end of 2012, assets domiciled outside of Mainland China were 25% of its total assets, much higher than the average 5% among BOC's peers.

Here's more from Bernstein Research:

In fact, none of BOC's peers had more than 8% of its balance sheet exposed to overseas assets. Due to its larger-than-peer foreign operation, BOC's currency exposures are much more diversified than peers. 25% of its assets are denominated in foreign currencies and 20% of them are tied to US dollars.

Bank of China's excess exposure to overseas assets results from its legacy as the foreign-exchange specialist bank for China during the 1980s and half of the 1990s.

In 1994, Bank of China's official mandate as the sole foreign-exchange bank in China was removed and the government-owned bank transitioned from a policy bank to a commercial bank.

Bank of China is the only bank in China that was recognized as a Global Systemically Important Financial Institution by Financial Stability Board, an international financial regulator. 

The greatest exposure to overseas assets that Bank of China continues to have is driven by its large (and successful) subsidiary in Hong Kong – Bank of China (Hong Kong). BOC(HK) is majority owned by Bank of China (which holds 66% of the equity) with the remaining shares listed on the Hong Kong Exchange.

BOC's Overseas Exposure - a Drag on NIM but Immunity to Interest Rate Liberalization

As Bank of China has large exposures (20% of its exposures are tied to US dollars) to regions (mostly Hong Kong) where a low interest rate environment prevails, its net interest margin has been dragged down by its overseas exposures over the past 6 years.

Bank of China's group level net interest margin has been 30-70bp lower than all its peers'. Its overseas exposure is a key driver for why BOC’s NIMs have underperformed its more domestically focused peers.

The net interest margin of BOC's non-domestic business has been 55-115bp below that of its domestic interest earnings business over the past four years.  

On the positive side, Bank of China's larger-than-peer overseas exposures make the bank more immune to the unfavorable domestic environment where deregulation of the banking sector is taking place.

With 75% of its balance sheet sourced within Mainland China, we calculate that Bank of China will be the least impacted by further liberalization of deposit interest rates in the coming years.

While the central bank has not provided a timeline with regards to further interest rate reforms on the deposit side, if interest rate band is widened from 10% to 20% above the benchmark level, we estimate Bank of China's net interest margin will narrow by 6bp as compared to 8-16bp at peers.

Meanwhile, the narrowing of NIM will reduce BOC's net profits by 5% as compared to an average 8% decline at peers.