Mixed results for S'pore firms

OCBC's earnings down 6% on one-time charge

OCBC’s total income for the third quarter rose 4 per cent to $2.66 billion from $2.54 billion a year ago.
OCBC’s total income for the third quarter rose 4 per cent to $2.66 billion from $2.54 billion a year ago. ST PHOTO: JAMIE KOH

OCBC Bank's net profit slipped 6 per cent to $1.17 billion for its third quarter ended Sept 30, from $1.25 billion a year ago, after booking a one-off charge at its Indonesian banking unit.

The one-time charge of $91 million came from a refinement in the group's expected credit loss modelling approach for Bank OCBC NISP. Excluding the one-time charge, the group's core net profit was $1.26 billion, slightly higher than the year-ago figure, Singapore's second-largest lender said in a regulatory filing yesterday.

Annualised earnings per share rose to $1.15, an increase from $1.06 for FY 2018.

No dividend was declared for the third quarter as the bank pays dividends on a semi-annual basis.

Total income for the quarter rose 4 per cent to $2.66 billion from $2.54 billion a year ago.

Net interest income for the quarter grew 6 per cent to $1.6 billion from $1.51 billion. This was due to a five basis point increase in net interest margin to 1.77 per cent from improved asset yields, and a 2 per cent increase in customer loans.

Meanwhile, non-interest income for the third quarter was up 2 per cent to $1.06 billion, from $1.04 billion a year ago.

Net fees and commissions grew 10 per cent to a new record of $550 million from $502 million a year ago, led by higher fees from wealth management, investment banking and remittance services.

Net trading income stood at $182 million, lower than the $213 million a year ago, as a decline in treasury income offset a rise in customer-related flow income.

The bank also saw allowances for loans and other assets more than tripling to $179 million, compared with $49 million a year ago.

OCBC's non-performing loans ratio was 1.58 per cent as of Sept 30. Its loan-to-deposit ratio was lower at 86.8 per cent, compared with 88.5 per cent a year ago. In addition, its common equity Tier 1 capital adequacy ratio stood at 14.4 per cent as of Sept 30.

On the group's performance and outlook, OCBC chief executive Samuel Tsien said loans rose year on year and fee income climbed to a record high, led by wealth management, as the private banking business continued to attract net new money inflows.

Great Eastern, an OCBC subsidiary, also reported increased operating earnings and new sales as well as higher business embedded value and margin.

"Global and regional economic growth continued to slow, and geo-political event risks have increased. We shall remain vigilant and will maintain prudent risk management practices while exercising disciplined cost management," Mr Tsien added.

OCBC shares closed at $11.08 yesterday, up 0.1 per cent.

A version of this article appeared in the print edition of The Straits Times on November 06, 2019, with the headline 'OCBC's earnings down 6% on one-time charge'. Print Edition | Subscribe