OCBC Q3 net profit surges 62% on one-off China gain and growth in loans

OCBC Wing Hang bank. -- PHOTO: OCBC
OCBC Wing Hang bank. -- PHOTO: OCBC

Singapore - A one-off gain from an increased stake in a China investment and strong earnings lifted OCBC's third quarter net profit by 62 per cent to $1.23 billion.

Excluding the $391 million one-off gain from its increased stake in Bank of Ningbo, OCBC's core net profit for the three months ended in September was 11 per cent higher at $841 million.

The one-off gain arose from an accounting change to recognise the fair value gain after OCBC increased its 15.3 per cent stake in Bank of Ningbo to 20 per cent, making it an associated company.

Net interest income increased 27 per cent to $1.25 billion from $978 million in the same period last year, helped by strong asset growth and higher net interest margin.

Net interest margin increased by five basis points to 1.68 per cent from 1.63 per cent, thanks to improved loan spreads and higher returns from money market activities.

OCBC saw improved loan growth in general commerce loans, housing loans and loans to professionals and individuals.

Non-interest income, meanwhile, rose 3 per cent to $801 million as fee and commission income increased 16 per cent to a record $406 million.

Wealth management, loan and trade fees boosted the fee and commission income.

Results from its latest jewel, OCBC Wing Hang, were included in its earnings for the first time.

The Hong Kong unit contributed $38 million to the net profit, based on OCBC's 97.5 per cent share in the bank following its acquisition on Jul 29.

The unit also added $24.9 billion to OCBC's loans growth.

But it also added to OCBC's operating expenses, which went up 28 per cent to $870 million. Excluding the purchase of the unit, operating expenses rose 16 per cent.

OCBC Wing Hang became a wholly-owned subsidiary after the third quarter on Oct 15.

Total non-performing assets increased 3 per cent to $1.37 billion, while the non-performing loan ratio stood at 0.7 per cent, down from 0.8 per cent a year ago and unchanged from the second quarter.

OCBC chief executive Samuel Tsien said in a statement: "Independent of the consolid

ation of OCBC Wing Hang's earnings, we achieved broad-based loan growth, improved our net interest margin and reported record fee income, particularly in wealth management.

"With the addition of OCBC Wing Hang, our earnings and asset base would be further diversified."