Oversea-Chinese Banking Corp, Southeast Asia's second-largest lender, posted record quarterly profit on a gain from the sale of stakes in a drinks manufacturer and a brewery.
Third-quarter net income more than tripled to S$1.85 billion (HK$11.7 billion) from S$513 million a year earlier, the Singapore-based bank said yesterday. Excluding the one-time gain of S$1.13 billion, profit was S$724 million, which exceeded the S$615 million average of six analysts' estimates.
DBS Group and United Overseas Bank also posted third-quarter profit that beat estimates as Singapore's banks withstood waning loan profitability in their home market, the lowest in the region.
Seeking to focus on its financial business, OCBC in August sold its stakes in Fraser & Neave and its Asia Pacific Breweries unit, the drinks maker's joint venture with Heineken that makes Tiger beer.
"We're waiting for more colour on what OCBC does with gains from the divestment," said Ken Ang, an analyst at Phillip Securities.
"My expectation is that it will not be distributed as dividends; rather it will be kept to manage Basel III's capital and liquidity requirements," Ang said, referring to global regulators' conditions to avoid another financial crisis.
Shares of OCBC closed up 0.11 per cent to S$9.10 in Singapore, compared with the benchmark Straits Times Index's 0.09 per cent decline.
Net interest income, the difference between what a bank charges on loans and what it pays on deposits, advanced 8 per cent to S$944 million.
The net interest margin, a measure of lending profitability, narrowed to 1.75 per cent from 1.85 per cent a year earlier.
Non-interest income excluding the gains from the divestment advanced 73 per cent to S$754 million, led by insurance, trading and wealth management.
Great Eastern Holdings, OCBC's insurance unit, said last week that third-quarter profit, excluding gains from selling its stakes in the drinks companies, rose fivefold to S$198 million from S$40.4 million a year ago.
"The results were above expectations," said Ang.
Moody's Investors Service has a stable outlook on Singapore's banks for the next 18 months.