Profit statements

Singapore bank OCBC’s second-quarter profit jumps 28%, optimistic about outlook

A woman walks past an OCBC signage in Singapore March 31, 2022. REUTERS/Caroline Chia

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SINGAPORE, Aug 3 (Reuters) – Singapore’s second-largest lender, Oversea-Chinese Banking Corp Ltd (OCBC) (OCBC.SI), reported a stronger-than-expected 28% rise in quarterly profit and presented strong outlook as rising interest rates pushed net interest margins higher.

With Singapore easing most of its local and COVID-19 travel restrictions since early April this year, banks are benefiting from the rebound in the Asian financial hub’s economic recovery.

“Overall economic growth in our key markets is expected to remain positive this year, but at a slower pace due to heightened headwinds in the operating environment,” said Helen Wong, group chief executive of OCBC, who took his duties last year, in the results statement on Wednesday.

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She said growth in net interest income due to higher interest rates should offset near-term pressure on non-interest income. She said credit costs are expected to be at the bottom of her forecast.

OCBC’s net profit rose to 1.48 billion Singapore dollars ($1.1 billion) in April-June, from 1.16 billion Singapore dollars a year earlier and from the average of 1.22 billion Singaporean dollars from five analysts’ estimates compiled by Refinitiv.

Singaporean banks are expected to record a net interest margin expansion of 10 basis points in April-June on a quarterly basis, the highest in eight quarters, outperforming their Asian peers, JPMorgan analysts said last month. .

OCBC’s net interest margin, a key indicator of bank profitability, rose 13 basis points to 1.71%, the highest level in two years, according to Refinitiv data.

The bank said higher trading revenue and profits from its life insurance business boosted non-interest income in the quarter, but net fee and commission income fell 15%, mainly due to lower wealth management, brokerage and investment banking fees.

Last week, small local lender United Overseas Bank Ltd (UOBH.SI) posted an 11% rise in quarterly profit, supported by a strong improvement in net interest income. Read more

($1 = 1.3829 Singapore dollars)

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Reporting by Anshuman Daga; Editing by Shri Navaratnam and Christopher Cushing

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