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OCBC Beats Forecast, 1Q2012 Net Profit Soars 32 Per cent


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by Ernie B. Calucag

Oversea-Chinese Banking Corporation Limited (OCBC), Singapore’s second largest lender, on Friday reported a 32-per cent jump in first-quarter net profit, thanks to a quality loan book, strong trading and investment income as well as bigger contribution from its insurance arm.

OCBC booked a quarterly net profit of S$832.0 million for 1Q2012, compared with S$628.0 million a year ago. Its profit exceeded the S$619.0 million average street forecast.

“Our first quarter performance reflects the strength of our customer franchise which enabled us to capture revenue opportunities in a generally improved market environment. Contribution from our insurance business was also higher as a result of improved investment performance,” OCBC chief executive Samuel Tsien said in a statement.

Net interest income grew 21 per cent to S$951.0 million from S$784.0 million, while non-interest income rose 28 per cent to S$790.0 million from S$618.0 million.

Compared with the previous quarter, net interest income increased three per cent on higher average asset volumes and a marginal increase in net interest margin.

Non-interest income (excluding divestment gains) grew 38 per cent, contributed by higher fees and commissions, increased gains from investment securities, and a significant increase in life assurance profit.

OCBC’s insurance arm Great Eastern Holdings last week reported a 65-per cent rise in net profit to S$262.5 million, helped by higher underwriting profit and gains on investments.

“While the global economic outlook is still mixed, we expect the strength and further expansion of our customer franchise in our key markets will continue to provide us with significant growth opportunities,” Tsien added.

The bank’s CEO expects low-teens percentage growth for its loans this year, slowing from growth of more than 20 per cent in 2011.

Tsien noted that loan margins, as reflected by net interest margins, would be stable on a group basis, with downward pressure in Malaysia and Indonesia offset by an expected slight increase in Singapore and other markets.

OCBC is the last of the three Singapore banks to report its first quarter results.

UOB on Wednesday posted a 12.1-per cent jump in first-quarter net profit to S$688.0 million while DBS Bank on April 27 announced a record quarterly net profit of S$933.0 million.

OCBC shares closed higher on Friday at S$8.94 each from Thursday’s S$8.93.