Singapore's OCBC beats Q1 estimates, rounding up strong quarter for banks

Singapore's OCBC beats Q1 estimates, rounding up strong quarter for banks

Singapore's second-biggest listed lender Oversea-Chinese Banking Corp Ltd reported an 11 per cent rise in quarterly profit on May 10, 2019, that beat market estimates, driven by broad-based growth, rounding up a strong quarter for local banks.

SINGAPORE: Singapore's second-biggest listed lender Oversea-Chinese Banking Corp Ltd reported an 11 per cent rise in quarterly profit on Friday (May 10) that beat market estimates, driven by broad-based growth, rounding up a strong quarter for local banks.

But after three years of robust loans growth, Singapore lenders are gearing up for tougher times as the city-state's economy is buffeted by global headwinds.

OCBC's January-March net profit came in at S$1.23 billion versus S$1.11 billion a year earlier, beating the S$1.16 billion average estimate of five analysts, according to data from Refinitiv.

"Record net interest income was boosted by asset growth and higher net interest margin (NIM)," OCBC CEO Samuel Tsien said in a statement, adding that the group's banking, wealth management and insurance franchise performed well.

Net interest income grew to a record S$1.53 billion, up 8 per cent from a year earlier. OCBC's shares rose 1.1 per cent in early trade in a broader market up 0.3 per cent.

Last month, Southeast Asia's biggest lender, DBS Group Holdings Ltd, beat market estimates to post a record quarterly profit, while United Overseas Bank Ltd's results were in line with expectations.

Preliminary data for Singapore's first-quarter GDP released last month confirmed the weakest year-on-year growth in almost a decade.

READ: Singapore's GDP growth slows to 1.3% in Q1: MTI advance estimates

A trade war between the United States and China - two of Singapore's biggest export markets - has disrupted global supply chains, in a blow to growth in many trade-reliant economies including the Southeast Asian country.

Moody's said in a report last month that weakening global growth was the largest risk to Singapore's near-term GDP growth.

"Trade-related sectors - such as manufacturing - are showing signs of weakness, reflecting a cyclical slowing in global growth and posing risks to the country's near-term economic performance," Moody's said.

On Friday, OCBC also reported a big rise in allowances for impaired loans to S$231 million from S$13 million a year earlier.

"Given the structural changes taking place in the offshore oil industry and continued absence of visible recovery in this sector, a prudent decision was made to substantially reduce collateral valuations further, to the extent of writing down vessels pending employment to scrap value," it said.

Source: Reuters/nc

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