OCBC 3Q Core Profit Up Slightly

Singapore’s second-largest lender reported core net profit of S$1.26 billion in the third quarter, slightly above the $1.25 billion reported a year earlier.

However, OCBC Bank’s headline net profit slipped 6 percent to S$1.17 billion for its third quarter ended September 30, from S$1.25 billion a year ago due to a one-off charge at its Indonesian banking unit.

The one-time charge of S$91 million arose as a result of refining the group’s expected credit loss modeling approach for Bank OCBC NISP. Excluding the one-time charge, the group’s core net profit of S$1.26 billion is slightly higher than $1.25 billion a year earlier.

Loans rose year-on-year and fee income climbed to a record high led by wealth management as the private banking business managed to maintain net new money inflows, said OCBC chief executive Samuel Tsien in a statement.

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

Net interest income for the quarter grew 6 percent to S$1.60 billion, stemming from a five basis point increase in net interest margin to 1.77 percent. Improved asset yields and a 2 percent increase in customer loans underpinned the improved net interest income.

Non-interest income for the quarter increased 2 percent to S$1.06 billion from S$1.04 billion in the previous year. Total income for the quarter rose 4 percent to S$2.66 billion from S$2.54 billion a year ago.

Not all sections of the bank’s results slip are glowing – net trading income was only S$182 million compared to S$213 million a year ago, as a decline in treasury income offset a rise in customer-related flow income.

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, Tsien said.