OCBC reports 3Q21 net profit rose 19 percent on business growth and lower allowances

OCBC branch in SingaporeOCBC branch in Singapore. Photo taken pre-Covid.

OCBC reported Wednesday its third quarter net profit rose 19 percent on-year to S$1.22 billion, on business growth and lower allowances as the credit outlook improved. The figure came in a bit above Daiwa’s forecast of S$1.209 billion.

“Our third quarter results were resilient, despite the challenging conditions associated with the Delta virus variant,” Helen Wong, group CEO of OCBC, said in a statement.

Net interest income for the July-to-September quarter came in at S$1.46 billion, up 3 percent on-year, on a 4 percent increase in average loan volumes, partly offset by a net interest margin (NIM) decline, the bank reported in a filing to SGX. That was below Daiwa’s forecast for S$1.58 billion.

NIM posted a 6 basis point drop to 1.52 percent, missing Daiwa’s forecast for 1.58 percent. OCBC attributed the decline to lower asset yields and gapping income and interest reversals.

Non-interest income for the third quarter slipped 2 percent on-year to S$1.099 billion, the filing said. That was slightly below Daiwa’s forecast for S$1.14 billion.

Weighing on non-interest income were mark-to-market  losses in Great Eastern Holdings’ investment portfolio, taking net trading income to S$83 million, down 67 percent on-year, the bank reported.

Outlook

CEO Wong pointed to growing momentum across the banking, wealth management and insurance business in the quarter, based on loan, net new money, fee and insurance sales growth.

“Asset quality is stabilising as the economic situation improves and we remain committed to supporting our customers to tide over this difficult period,” she said in the statement. “We remain positive on the long-term outlook but are watchful of the near-term headwinds from the pandemic. Together with our strong business franchise and established global network, we are well-positioned to tap on the rising opportunities in the region.”

Read details on OCBC’s third quarter update and details of the CEO’s update.