Robust growth across the board drove earnings to record levels at OCBC Bank in the second quarter.
The gains from loans and wealth management were a standout while the Greater China franchise continued to lift its profit contribution.
Net profit for the three months to June 30 rose 14 per cent year on year to a new high of $1.05 billion, crossing the $1 billion mark for the first time, OCBC reported yesterday. Revenue was up 12 per cent to $2.22 billion.
The profit from Wing Hang Bank, which OCBC acquired last July as the cornerstone of its Greater China business, was up 6 per cent from the first quarter to $82 million.
If Great Eastern's contribution is excluded, OCBC's core banking profit was $818 million, up 14 per cent from last year.
This came as both net interest income and non-interest income rose to new highs.
Net interest income was up 14 per cent from last year to $1.28 billion, with a margin of 1.67 per cent, ahead of the first quarter's 1.62 per cent. In the interest income segment, total customer loans grew 18 per cent year on year - or 16 per cent excluding currency effects - to $210 billion.
Credit grew the most in Greater China, where loans were up 110 per cent year on year partly due to stronger flows through Wing Hang, which made up 13 per cent of group loans. There is no issue with Greater China's asset quality despite the loans growth, as the non-performing loan (NPL) ratio there actually fell to 0.3 per cent.
This was lower than the group's NPL ratio of 0.7 per cent, which was also largely unchanged across the past four quarters, chief executive Samuel Tsien noted.
And while the group reported higher non-performing assets (NPAs) at $1.49 billion, new NPAs mostly came from one account in Malaysia and another in Indonesia. "The (new NPA) amount is around $150 million, still relatively small in the context of our total portfolio," added Mr Tsien.
Meanwhile, fee and commission income grew 24 per cent to $438 million, also a new high. This helped push non-interest income up 10 per cent to $939 million.
The key driver on this front was wealth management, which contributed $693 million in income - 31.2 per cent of the group's total - for the quarter.
Mr Tsien was optimistic about the period ahead for OCBC. He said: "The most encouraging sign is that we need to have a diversified base to generate earnings from different sectors and markets - we were able to achieve that. That positions us very well into the future."
Earnings per share was 25.6 cents, up 1.6 per cent from a year ago, while net asset value before valuation surplus was $7.80 per share, up 6.1 per cent from a year ago. An interim dividend of 18 cents was declared, unchanged from a year ago. OCBC closed two cents up at $10.29 after the results announcement.