SINGAPORE - The first of Singapore's Big Three banks to announce third quarter results, Oversea-Chinese Banking Corporation (OCBC Bank), beat forecasts with a 12 per cent jump in net profit to S$1.06 billion from S$943 million a year ago.
Analysts polled by Bloomberg had tipped a 1.2 per cent rise in earnings to S$974 million.
But the bank also flagged continued stress in the oil & gas sector and said specific provisons for bad loans jumped 39 per cent year-on-year to S$138 million.
Net profit after tax for the first nine months of 2017 rose 16 per cent to S$3.11 billion from S$2.68 billion a year ago.
OCBC said its strong performance in the third quarter was driven by sustained momentum across the Group's banking, wealth management and insurance businesses in its key markets of Singapore, Malaysia, Indonesia and Greater China.
Net interest income grew 12 per cent to S$1.38 billion in 3Q17 from S$1.23 billion a year ago, underpinned by asset growth and higher net interest margin (NIM).
Average customer loans rose 11 per cent, driven by broad-based lending across industries and geographical segments.
NIM for the quarter rose by 4 basis points to 1.66 per cent, largely due to an increase in the average loans-to-deposits ratio (LDR) and higher yields from money market placements, said OCBC.
Non-interest income was 1 per cent higher at S$978 million as compared to S$970 million a year ago. Fees and commissions increased 14 per cent to S$488 million, mainly from wealth management, fund management and trade-related income.
Wealth management fee income grew 32 per cent year-on-year, partly contributed by the former wealth and investment management business of Barclays in Singapore and Hong Kong, which was acquired in November 2016.
Net realised gains from the sale of investment securities increased 55 per cent per centfrom a year ago to S$64 million, while net trading income was 27 per cent lower at S$118 million.
Profit from life assurance rose 23 per cent to S$201 million as operating profit from Great Eastern Holdings' underlying insurance business grew year-on-year and its investment portfolio achieved positive performance as a result of favourable market conditions.
The group's share of results of associates rose 21 per cent to S$127 million.
Total net allowances for loans and other assets for the third quarter dropped to S$156 million from S$166 million a year ago and S$169 million in the previous quarter. But specific loan allowances rose to S$138 million from S$99 million a year ago.
Total non-performing assets (NPAs) rose 15 per cent to S$2.98 billion as of Sept 30, 2015, from S$2.59 billion a year ago, mainly led by the downgrade of corporate accounts in the oil and gas support services sector, which continued to be under stress, OCBC said.
Quarter-on-quarter new NPA formation was lower while the overall non-performing loans (NPL) ratio has remained stable at 1.3 per cent since end-2016, the bank added.
Said CEO Samuel Tsien: "Our strong third quarter earnings demonstrated the quality and continued momentum in each of our banking, wealth management and insurance franchises. Our key markets of Singapore, Malaysia, Indonesia and Greater China have all contributed to our broad-based income growth. Asset quality was stable and healthy coverage ratios were maintained.
"Business activities and investments are generally picking up in tandem with regional economic trends and we are well-placed to serve our customers and capture opportunities as they arise. However, we will remain watchful of ongoing geo-political event risks and the continuing stress observed in the oil and gas industry."
UOB announces third quarter earnings on Nov 3, while DBS will do so on Nov 6.