OCBC Q1 profit more than doubles to record $1.5 billion

SINGAPORE – OCBC beat market expectations on Friday (May 7) as its first-quarter profit more than doubled on the strong performance of its wealth and insurance businesses and lower allowances for bad loans.

Net profit for Singapore’s second-biggest local bank came in at a quarterly high of $1.5 billion for the three months to March, topping the $901.9 million average of analysts’ estimates compiled by Refinitiv, and versus $698 million for the year-ago quarter.

Non-interest income surged by 70 per cent year on year to $1.47 billion from higher fees, trading and insurance income, against the backdrop of an improving operating environment and favourable market conditions, said OCBC.

Net interest income was 11 per cent lower at $1.44 billion, compared to $1.63 billion last year. This was due mainly to a 20 basis points compression in net interest margin in the sustained low interest rate environment, said the bank.

Net interest margin stood at 1.56 per cent, unchanged from the previous quarter, and lower than the 1.76 per cent for the first quarter of 2020.

Allowances for the quarter at $161 million were 75 per cent lower than the $657 million for the year-ago period. 

Group CEO Helen Wong, delivering her first set of OCBC results, said: “We are pleased to report a robust set of results for the first quarter, which was underscored by the strength and resilience of our banking, wealth management and insurance franchise. 

“Earnings were up in our core markets and the momentum across our businesses is building up from renewed market optimism.”

Her comments on the bank’s outlook echo those of the CEOs of DBS and UOB, which also reported robust first-quarter results.

Globally, banks have rebounded from their Covid-19 slump, boosted by a return to income growth, a surge in trading profits and lower provisions for losses that hurt their earnings last year.

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