SINGAPORE — Singapore’s second-largest bank Oversea-Chinese Banking Corp. (OCBC) reported on Friday a stronger-than-expected 14-percent year-on-year jump in second-quarter (Q2) net profit and said it was firmly on track to meet its 2024 targets.
“As we look ahead, we are alert to the heightened level of geopolitical uncertainties,” OCBC’s Group Chief Executive Officer Helen Wong said in a statement.
“With our strong capital position, diversified earnings base and prudent approach toward risk management, we are well-positioned to navigate the challenging macroeconomic landscape,” she added.
OCBC, which is also Southeast Asia’s second-largest lender by assets, said its April-June net profit rose to SG$1.94 billion ($1.45 billion) from SG$1.71 billion a year earlier, driven mainly by income growth and a decline in allowances.
This was above the mean estimate of SG$1.82 billion or expectations for a 6.4-percent on-year rise from five analysts polled by LSEG.
OCBC maintained its 2024 earnings guidance of net interest margin in the range of 2.20 percent to 2.25 percent, low single-digit loan growth, credit costs between 20 and 25 basis points and 50-percent dividend payout, Wong’s presentation showed.
The bank’s earnings followed that of smaller peer United Overseas Bank (UOB), which on Thursday reported a 1-percent on-year rise in second-quarter net profit to SG$1.43 billion, in line with estimates.
The results from UOB and OCBC this week kick-start the current earnings season for Singaporean banks, which have benefited from strong inflows of wealth into Asia, thanks to its political stability, low taxes and policies favorable toward family offices and trusts.
OCBC’s second-quarter result showed a 17-percent on-year jump in wealth management fees to SG$212 million, while asset under management rose 2 percent to record level of SG$279 billion.
UOB’s wealth assets under management climbed 10 percent on-year to SG$182 billion, its results posted on Thursday showed.
Larger peers DBS is due to announce its results on August 7.
OCBC, which counts Singapore, Greater China, Indonesia and Malaysia among its key markets, declared an interim dividend of 44 Singapore cents a share, up 10 percent from a year ago.
Return on equity climbed to 14.2 percent in the second quarter from 13.5 percent in the same period of 2023.
Net interest margin, a key profitability gauge, declined to 2.20 percent during the quarter from 2.26 percent a year earlier.
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