OCBC quarterly net profit jumps 54pc
Reuters in Singapore
Oversea-Chinese Banking Corp, Singapore's second-biggest lender, yesterday posted a 54 per cent rise in quarterly net profit, beating expectations thanks to brisk loan growth and a strong performance from its insurance unit.
OCBC, which boosted its China exposure last week by gaining over 90 per cent control of Hong Kong lender Wing Hang Bank, said it expected to take advantage of growing investment and trade flows between China and Southeast Asia.
The bank earned S$921 million (HK$5.73 billion) in the three months to June 30, compared with S$597 million in the same period a year earlier. The figure topped the S$796 million average forecast of six analysts polled by Reuters.
OCBC's shares have underperformed those of DBS and United Overseas Bank this year since it became known the bank intended to buy Wing Hang, a move that increased its exposure to China's slowing economy.
Investors were also concerned about a potential rights issue of about S$3 billion to fund the acquisition.
OCBC shares are 3.3 per cent lower so far this year, compared with an almost 6 per cent rise for larger rival DBS and an 8.3 per cent gain for UOB.
Singapore banks are witnessing a slowdown in the housing market in response to government cooling measures, forcing them to diversify earnings from further into areas such as trade finance and wealth management.
OCBC's quarterly net interest income - the gap between what a bank makes from loans and pays on deposits - rose 17 per cent to S$1.1 billion, on the back of a 12 per cent year-on-year rise in customer loans.
Contributions from insurance unit Great Eastern boosted non-interest income by 40 per cent. Bad debt charges fell just over 20 per cent to S$66 million.