In the last quarter of 2017, OCBC managed to increase its net profit by 31% y-o-y to S$1.03 billion from S$789 million. The net profit for the full year has gone up by 19% y-o-y to S$4.15 billion as against S$4 billion last year. Profit from Singapore
BankBazaar Singapore – February 14, 2018
Singapore: Oversea-Chinese Banking Corporation (OCBC) has posted strong growth in the concluding quarter of 2017. The net profit for the bank has jumped by 31% y-o-y from S$789 million to S$1.03 billion.
The results seem to be even more astounding given the fact that market mavens, in a Bloomberg poll, had forecast a net profit of S$956 million approximately.
For the full year, the net profit, as reported by the bank, rose to S$4.15 billion, witnessing a jump of 19% over the previous year. The bank has managed to post a net profit in excess of S$4 billion for the first time in its history, buoyed by robust performances across all its three key verticals – banking, wealth management, and insurance.
Profit from Singapore accounted for 55% of the total profit posted by the group, followed by profit from China at 19%, and that from Malaysia at 14%.
In a news release on Wednesday, the bank said that its total income has risen by 14% y-o-y to settle at S$9.6 billion approximately.
Net interest income (NII), a measure of the difference between interest earned by the bank on its assets like OCBC loan and its payments on deposit accounts, has jumped by 7% over the previous year to touch S$5.42 billion for 2017.
The bank informed its concerned stakeholders that NII for Q4 2017 has increased by 14% y-o-y to touch S$1.42 billion, driven by a 1.67% growth in net interest margin (NIM) and an 11% growth in average interest-earning assets.
Non-interest income has grown by 30% y-o-y to S$1.21 billion. Wealth management and investment banking activities also contributed handsomely to the net income, as indicated by a 17% increase in commissions and fees.
The bank has said that favourable market conditions helped it improve its operating profit from its insurance vertical. It needs to be highlighted in this context that Great Eastern, the insurance arm of OCBC, has managed to more than double its net profit for the fourth quarter of 2017 to S$423.6 million, on the back of favourable tailwinds.
As per the press release, the net profit from life insurance for 2017 rose to S$877 million from S$499 million in 2016.
OCBC has also managed to improve its liquidity and capital position helped by strong growth in the customer loan segment. Customer loans for the whole year went up by 8% from S$220 in 2016 to S$237 in 2017.
Samuel Tsien, Chief Executive for OCBC, said that despite higher provisions towards bad assets in the offshore & marine (O&M) portfolio in Q4 2017 against Q3 2017, things looked better. However, things look a little stressed because charter rates are yet to pick up despite a rebound in the oil prices.
Overall provisioning for unproductive assets for the quarter is, however, down by S$305 million y-o-y.