OCBC Q3 Net Profit Up 62% As Loans Surge, One-Off China Gain

156

Categories:

SINGAPORE, Oct 30 – Oversea-Chinese Banking Corp , Singapore’s second-biggest lender, reported a 62% rise in quarterly profit on Thursday, helped by a one-off gain from its China unit and strong loan growth. The S$1.23 billion (RM3.16 billion) net profit includes a fair value gain of S$391 million due to its increased stake in Chinese lender Bank of Ningbo, which became a 20%-owned subsidiary during the last quarter.

Excluding that one-off gain, the net profit of S$841 million for the third quarter was slightly below the S$845 million average forecast of five analysts polled by Reuters. It posted a net profit of S$759 million a year ago. The growth in Singapore bank earnings is tapering off, hit by slower Asian economic growth and an end to the domestic housing boom in middle of last year.

Housing loans – in Singapore as well as major foreign markets – remained a significant growth engine for local banks in the past few years and accounted for around 25% of their total loans in the second quarter. Trade finance business for Singapore banks, largely related to China, has also slowed in recent months as the world’s second-biggest economy grew at its slowest pace since the global financial crisis in the September quarter.

OCBC also recorded a S$38 million gain from Hong Kong’s Wing Hang Bank, which it took over earlier this year in a $5 billion deal. “I am also pleased to report that the integration of OCBC Wing Hang is progressing well,” the bank’s CEO Samuel Tsien said in a statement, adding the deal would help the bank capture new cross-border opportunities.

OCBC also said a team of relationship managers from OCBC Wing Hang is being setup in its private banking unit, Bank of Singapore, to target business owners. Wealth management has been a key driver for OCBC since it completed the acquisition of ING’s Asian private banking arm in 2010. Wealth management income rose 17% in the nine months to September to a record S$1.68 billion.

OCBC’s quarterly net interest income – the gap between what a bank makes from loans and pays on deposits – rose 27% to S$1.25 billion, on the back of a 27% year-on-year rise in customer loans. Shares of OCBC have underperformed peers DBS Group Holdings and United Overseas Bank this year on the back of some concerns about the China-related risk in the wake of the Wing Hang deal.

Leave Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.

  • SEPANG, 13 June 2020 – AirAsia is extending the sale of its Unlimited Pass Cuti-Cuti Malaysia for an additional two… https://t.co/RwRyNNTyiV Jun 13, 2020
  • AIR ITAM – Air Itam State Assemblyman YB Joseph Ng Soon Siang hopes the installation of decorative lamps at the Air… https://t.co/0jMgaQ2MAd May 24, 2020
  • Having Problem With Storage? Check Out This Article To Help You Resolve Your Problem! https://t.co/9u7NUSlXK7… https://t.co/8Wf2zkcgFC Apr 23, 2020