OCBC Q1 profit slips 10% to $1.36 billion on lower trading income, life insurance profit

OCBC's latest earnings were higher than the previous quarter, driven by a rise in operating profit and lower allowances. PHOTO: REUTERS

SINGAPORE - OCBC Bank reported on Friday (April 29) a decline in first-quarter earnings from a quarterly record a year ago amid lower wealth management fees, trading income and life insurance profit.

Net profit for Singapore's second-biggest local bank came in at $1.36 billion for the three months to March, down 10 per cent from a year ago but ahead of the $1.26 billion forecast by financial data platform Refinitiv.

Its earnings were lower than the $1.5 billion it reported a year ago on the back of strong performance of its wealth and insurance businesses, and lower allowances.

Singapore's other two local banks, DBS Bank and UOB, also reported on Friday first-quarter earnings that fell 10 per cent from a year ago amid weaker and volatile markets.

OCBC group chief executive Helen Wong said Asia's growth is expected to remain resilient as the world transits to an endemic Covid-19 environment.

"The gradual reopening of economies and borders in South-east Asia will drive a further rise in economic activities and we continue to closely monitor the evolving pandemic situation in Greater China.

"Looking ahead, we will be vigilant to risks arising from geopolitical tensions, rising inflation and the pace of policy normalisation. We will continue to be disciplined and prudent in pursuing our strategy to excel for sustainable growth," she said.

OCBC's net interest income rose 4 per cent year on year to $1.5 billion. Asset growth of 5 per cent was partly offset by a one-basis point drop in net interest margin - a key gauge of banks' profitability - to 1.55 per cent.

Non-interest income slid 23 per cent to $1.14 billion due to lower wealth management fees, trading income and life insurance profit.

"The prior year's non-interest income was underpinned by robust customer and investment activities arising from favourable market conditions," said OCBC.

Operating expenses rose 5 per cent mainly due to higher staff costs linked to headcount growth and a rise in costs related to information technology. Meanwhile, allowances set aside for loans and other assets for the quarter were 73 per cent lower than a year ago.

OCBC's revenue fell 9 per cent from a year ago to $2.64 billion.

Its latest earnings were 39 per cent higher than in the previous quarter, driven by a rise in operating profit and lower allowances.

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