SINGAPORE: Oversea-Chinese Banking Corp (OCBC), Singapore’s second-largest lender, said on Wednesday (Feb 14) its net profit for last year rose 19 per cent from a year ago to S$4.15 billion.
This is the first time the bank’s net profit surpassed the S$4 billion mark, OCBC said in a press release, adding the “strong performance was driven by sustained growth momentum” across the group’s banking, wealth management and insurance businesses.
The results also showed that total income rose 14 per cent over the prior year to exceed S$9.6 billion. Net interest income rose 7 per cent from the previous year to S$5.42 billion on the back of strong asset growth.
As of Dec 31, 2017, customer loans increased 8 per cent to S$237 billion, underpinned by broad-based growth across key customer and geographical segments.
Net trading income, mainly comprising treasury-related income from customer flows, was S$515 million compared to S$529 million a year ago, while net gains from the sale of investment securities more than doubled to S$431 million.
Profit from life assurance of S$877 million was “considerably higher” than S$499 million in 2016, the bank said, as Great Eastern Holdings achieved “strong underlying business growth and higher investment income from realised gains and favourable market conditions”.
Operating expenses of S$4.03 billion were 6 per cent above the previous year, mainly attributed to higher staff costs and a rise in expenses to support business expansion.
This, the bank said, included the full year cost impact from the consolidation of the former wealth and investment management business of Barclays in Singapore and Hong Kong, which was acquired in November 2016.
Q4 NET PROFIT UP 31 PER CENT
OCBC also said in its press release that net profit for the fourth quarter of 2017 came in at S$1.03 billion, 31 per cent above S$789 million a year ago.
Net interest income, which refers to interest it earns from loans, increased 15 per cent to S$1.4 billion from S$1.2 billion the same period a year ago.
Net interest margin, which is the difference banks make from the interest it earns through giving out loans and the interest it pays out to customer deposits, came in at 1.67 per cent compared to 1.63 per cent a year ago.
Meanwhile, the bank’s non-performing loan rate rose to 1.45 per cent in the fourth quarter, compared to 1.26 per cent a year earlier.
Despite the rise in oil prices reported towards the end of 2017, the charter rates and asset values of the offshore support services and vessels in the oil and gas industry continue to be depressed, OCBC said.
Chief executive Samuel Tsien said that given the continued weakness, the bank made additional specific allowances to reflect the uncertain market outlook.
OCBC has proposed a payout of S$0.19 a share for its final dividend for 2017, up from S$0.18 declared a year earlier. This brings the bank’s total dividends for the full year to S$0.37 a share, up from S$0.36 in the preceding year.
“Sentiments in the region have on the whole been lifted by strong economic indicators and improved business confidence, which have spurred renewed optimism in our key markets. However, there continued to be geo-political events and financial market volatilities that we would need to remain watchful of,” Mr Tsien said.
OCBC’s results came as Singapore’s largest lender DBS Group matched market estimates last week with a 33 per cent rise in quarterly profit, and UOB posted a 16 per cent rise in quarterly net profit on Wednesday.
Additional reporting by Brandon Tanoto.