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Reaching Estimates Singaporean Bank OCBC shines in Q2 with 32% Profit Rise

Oversea-Chinese Banking Corp. (OCBC), Singapore’s second-largest lender, reported a 24% increase in second-quarter net profit on Friday, August 4, which was in line with forecasts and was primarily driven by greater income growth and partially offset by higher allowances.

OCBC, which is also the second-largest lender in Southeast Asia in terms of assets, reported that from April to June, its net profit increased from S$1.28 billion to S$1.71 billion (US$1.28 billion).

Comparatively, the mean profit expectation of the four analysts surveyed by Refinitiv was S$1.76 billion.

An interim dividend of 40 cents per share was announced for the 1HFY2023, which is a 43% increase over the interim payout of 28 cents from the prior year. According to OCBC’s policy, which aims for a dividend payment ratio of 50%, the group’s earnings for the past six months account for around 50% of the current dividend payout. On February 24, the company said that it would do so in its FY2022 report. On August 15, unitholders will receive their dividend payments.

Total income increased by 30% year over year during the six-month period to $6.81 billion. A 6% average asset growth and a 65 basis point (bps) increase in net interest margin (NIM) drove net interest income (NII) to increase by 48% year over year to a record $4.73 billion.

Non-interest revenue increased by 3% year over year to $2.08 billion as greater income from trading, investments, and insurance offset reduced income from fees. Net trading income climbed as a result of net gains from the sale of investment securities and higher insurance profit, while fee income decreased as a result of a loss in wealth fees brought on by a dip in client activity in the context of a risk-off investing environment.

Insurance revenue increased by 10% year over year to $500 million, primarily due to stronger investment results.

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