Higher costs related to its acquisition of Wing Hang Bank last year weighed on Oversea-Chinese Banking Corp’s fourth quarter profits, the Singaporean bank said in its full-year earnings report on Wednesday.
Net profit rose 11 per cent to S$791 million (HK$4.5 billion) in the last three months of the year, OCBC said. The results fell 11 per cent below Barclays Research’s expectations. Full-year net profit at S$3,842 million was also below expectations.
OCBC shares fell slightly in morning trading in Singapore.
Lower-than-expected net interest margin and greater credit cost provisioning were the main factors that weighted earnings last year, Barclays noted.
The higher coverage in 2014 was also partly a result of the consolidation of OCBC Wing Hang’s cumulative allowances
Provisions for loans and other assets in 2014 hit S$357 million, rising more than 34 per cent from the previous year. OCBC said that its takeover of Wing Hang in Hong Kong in part pushed up those provisions. Coverage of secured and unsecured non-performing loans also jumped. Provisions for unsecured non-performing assets climbed to 539 per cent last year from 310 per cent the year before.