The Oversea-Chinese Banking Corp (OCBC) reported a 14 percent rise in quarterly profit on Tuesday (May 9), largely led by sustained growth in its wealth management business and robust results from insurance operations. This comes after a bigger-than-expected 18 percent drop in quarterly net profit in the previous quarter. The city-state's second-biggest lender said net profit came in at S$973 million in the three months that ended Mar 31, versus S$856 million a year ago and S$789 million the previous quarter. Net interest income for the quarter was 3 per cent lower at S$1.27 billion compared to S$1.31 billion a year ago as higher asset growth was offset by net interest margin compression, the bank said. Average customer loans grew 5 per cent year-on-year led by broad-based growth across most industry segments and key markets but net interest margin contracted 13 basis points to 1.62 percent, largely due to reduced customer loan yields and excess liquidity placed in high quality but lower-yielding interbank placements, according to OCBC. Non-interest income was up 30 percent at S$977 million, as the bank completed its S$430 million acquisition of Barclays' wealth business in Asia and saw profits from life assurance double. Overall wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, grew 50 percent to S$724 million, from S$482 million a year ago. Wealth management accounted for a greater proportion of the group's total income, contributing 32 percent compared with 23 percent in the same period last year. "We achieved broad-based loan growth, grew our private banking assets under management (AUM), and reported significantly higher fee income," CEO Samuel Tsien said in a statement on Tuesday. The bank said the overall quality of its loan portfolio remained stable and although the stress in the oil and gas support services sector continued, sufficient provisions had been made. OCBC reported the largest first quarter net profit growth among the three Singapore banks, with DBS and United Overseas Bank posting increases in quarterly profit of 1 per cent and 5.4 per cent, respectively.
