OCBC Q2 net profit up 14% to record $1.05b, beating forecasts

Oversea-Chinese Banking Corporation Ltd (OCBC Bank) reported stellar earnings for the second quarter.
Oversea-Chinese Banking Corporation Ltd (OCBC Bank) reported stellar earnings for the second quarter. PHOTO: ST FILE

SINGAPORE - Oversea-Chinese Banking Corporation Ltd (OCBC Bank) reported stellar earnings for the second quarter, beating forecasts, when profit rose to a new high on the back of record net interest income and none interest income.

Net profit for the three months to June30 was up 14 per cent year-on-year to $1.05 billion - crossing the  $1 billion mark for the first time, OCBC said in its results announcement on Friday (July 31).

That beat the average forecast of $969 million in a Bloomberg survey of eight analysts.

Excluding Great Eastern's contribution, profit from core banking operations rose 14 per cent to $818 million.

The record earnings came as net interest income jumped 14 per cent year-on-year to a new high at $1.28 billion, with customer loans growing 18 per cent to $210 billion.

Net interest margin improved to 1.67 per cent from 1.62 per cent in the previous quarter, but shrank year-on-year from 1.7 per cent from a year ago, "the result of a lower loan-to-deposit ratio and reduced money market gapping activities," OCBC said.

The bank's non-performing loan ratio crept up to 0.7 per cent from previous quarter's 0.6 per cent, but was unchanged compared with a year ago. Non-performing assets amounted to $1.49 billion.

Also during the quarter, fee and commission income of the bank also grew to a new high, up 24 per cent year-on-year to $438 million. Wealth management was the key driver on this front, as the business contributed $693 million in income. As a result, non-interest income rose 10 per cent year-on-year to $939 million.

The record-breaking second quarter earnings lifted the first half net profit to $2.04 billion, up 12 per cent year-on-year. For the six months, an interim dividend of 18 cents per share was declared.

Chief executive Samuel Tsien said: "Our results demonstrated the strength of our banking and wealth management franchise.

"While watchful of the possibility of renewed volatility in the global financial markets, we remain focused on our strategy of deepening and growing the group's network to support our customers."

 An interim dividend of 18 cents per share was declared for the first half-year.