OCBC Bank was cautiously optimistic on the outlook despite a 9 per cent decline in fourth-quarter earnings after a cut in expenses failed to offset a decline in income.
Outgoing chief executive Samuel Tsien told a briefing yesterday: "Looking forward, we believe most countries are exiting from the trough of this (Covid-19) crisis, although the recovery continues to be sectorial.
"We will continue to be cautious and we believe that a strong recovery will probably not be seen until towards the end of this year and stronger into next year."
He expects recovery to be even stronger if the global economic outlook improves. "It is also very important for the United States market to pick up, not only from a China-US trading perspective.
"The US is a very strong consumer market and if that market can recover, as is now expected with the proper policies put in place, we have high hopes that the recovery will be stronger than what we even expect right now."
Mr Tsien will hand the reins to Ms Helen Wong, the bank's deputy president and head of global wholesale banking, in mid-April.
OCBC posted a fourth-quarter net profit of $1.13 billion, down from $1.24 billion a year earlier but ahead of the $968 million average estimate of seven analysts polled by Bloomberg.
A final dividend of 15.9 cents a share was declared, down from 28 cents in 2019. The scrip dividend scheme will be applicable.
OCBC's net interest income for the three months to Dec 31 fell 11 per cent year on year to $1.44 billion, while net interest margin, a key gauge of bank profitability, fell 21 basis points to 1.56 per cent.
Allowances for the quarter were up 37 per cent to $285 million, while total allowances for the full year more than doubled to $2.04 billion amid the uncertain economic and market outlook.
OCBC's non-performing loans ratio was 1.5 per cent as at Dec 31, unchanged from a year earlier.
Annualised earnings per share stood at 99 cents for the quarter, down from $1.11.
Full-year net profit came in at $3.59 billion, down 26 per cent from the record $4.87 billion recorded in 2019.
Its net interest margin was dented by a sharp drop in market interest rates and higher credit loss allowances to buffer against effects from the pandemic.
OCBC counts Singapore, Malaysia, Indonesia and Greater China as its key markets.
Wealth management income was a bright spot, dipping just 1 per cent to $3.37 billion from a record a year earlier.
Although net fee income fell, wealth management fees climbed 5 per cent to a new high, driven by strong customer investment activity amid low interest rates.
Mr Tsien noted that just 2 per cent of the group's total loans making up $5.7 billion were under moratorium as at Jan 31.
In Singapore, loans under moratorium also make up 2 per cent of the bank's total loans made here, amounting to $2.7 billion. Most were made to consumers and small and medium-sized firms.
Mr Tsien said the exit of loan relief programmes has been smooth in the group's various markets.
"Majority of these exposures are secured, even for those under the second relief programme, the performance ratio is over 90 per cent, meaning they are able to meet the requirements of repayment under the second relief programme."
Earlier this month, DBS Bank reported a 33 per cent fall in fourth-quarter earnings as its net interest margin fell and it set aside higher allowances for potential bad loans amid the pandemic.
But DBS chief executive Piyush Gupta was upbeat on the year ahead, saying economic data supports a solid rebound and that the bank's strong performance last month provided a head start to the months ahead.
UOB reports its results today.
OCBC shares closed up 2 per cent to $10.85 yesterday, while DBS gained 2.9 per cent to $26.40.
