OCBC's fourth quarter results are broadly in line with the lower earnings reported by DBS Group last Friday.

Its core earnings for October to December fell a staggering 41 per cent to $250 million even though it managed to grow the income it got from its core banking business by 28 per cent to $783 million.

This is due mainly to a sharp 44 per cent drop in non-interest income to $259 million and a big jump in provisions for bad loans to $243 million from a mere $13 million in the same period last year.

As expected, the bank faithfully trotted out the explanation used by many other firms to explain the sub-quality earnings.

It said that the severe market conditions and depressed economic environment in the second half had adversely impacted the group's insurance, investment and trading income and also resulted in significantly higher allowances for loans and other assets.

OCBC boss David Conner is also not upbeat about the prospects ahead. 'The current recession is expected to continue throughout 2009. While our strategic direction remains unchanged, we intend to manage our expenses more tightly and maintain our high alert for risk management, given the uncertain outlook,' he said in a statement accompanying the results.

But unlike DBS who had gone to shareholders to raise $4 billion to shore up its capital base last month, OCBC seems to be taking a different approach to get cash.

Rather than do a rights issue, it plans to reactivate its scrip dividend scheme and give shareholders the option to receive the final payout of 14 cents a share in the form of shares. It is sweetening the move by setting the issue price for the new shares at a 10 per cent discount to the average closing price of OCBC between the ex-dividend date and the book closure date.

If all investors take up the dividend in the form of scrips, the bank can retain $437 million in capital - a tidy sum not to be sniffed at. Given the current depressed level of its share price - it now trades at a six-year low - some investors may well take up the offer.