OCBC doubles Q1 profit, rounds up strong outlook for Singapore banks

SINGAPORE: Oversea-Chinese Banking Corp (OCBC) more than doubled its quarterly profit on Friday (May 7) as it handily beat market estimates thanks to a robust performance in its wealth management business and a drop in credit allowances.

The results rounded up a strong showing by DBS Group and United Overseas Bank in tandem with a recovering global economy that is helping boost bank earning across many countries.

Kevin Kwek, a senior analyst at Stanford C Bernstein, said OCBC and DBS had the stronger performance among the banks, though "loan growth for OCBC was however the weakest, flat year-on-year, so any improvement there could help sustain the recovery".

Net profit for OCBC came in at a record S$1.5 billion in the quarter ending in March versus the S$901.9 million average of three analysts' estimates compiled by Refinitiv. This compared with S$698 million profit reported in the year-ago period.

"Earnings were up in our core markets and the momentum across our businesses is building up from renewed market optimism," Chief Executive Officer Helen Wong, who took charge last month, said in a statement.

The stellar earnings at OCBC, which counts Singapore, Greater China and Malaysia, among its key markets, were underpinned by growth in trading income, fees and commissions and insurance. Allowances for credit losses declined to S$161 million in the latest quarter from S$657 million a year earlier.

The bank's net interest margin, a key profitability gauge, fell to 1.56 per cent from 1.76 per cent but was stable from the fourth quarter.

OCBC's shares have risen 23 per cent so far this year, outperforming peers and the broader local index.