Interest earning assets and fee growth increase OCBC 1H15 profit
(5 August 2015 – Singapore) Oversea-Chinese Banking Corp (OCBC)’s after-tax profit for the first half was S$2.04 billion (A$2.03 billion), 12 percent above the result at the same time a year ago.
Net interest income grew 14 percent to S$2.53 billion, as compared with S$2.21 billion a year ago, largely from an 18 percent rise in interest-earning assets.
Non-interest income rose 9 percent from a year ago to S$1.80 billion from S$1.65 billion.
Fee and commission income increased 18 percent to S$833 million from broad-based fee growth.
Net trading income was lower at S$193 million as compared to S$232 million in 1H14, despite a 9 percent increase in income from customer flows.
Net gains from the sale of investment securities of S$209 million were higher than S$65 million a year ago, mainly from realised investment gains in GEH’s equity portfolio.
Profit from life assurance of S$331 million was lower than S$403 million the previous year.
The Group’s 1H15 wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, rose to a new high of S$1.28 billion, 11 percent above S$1.15 billion a year ago.
As a share of the Group’s total income, wealth management contributed 29 percent, a level comparable with that of 1H14.
OCBC’s private banking business continued to expand, with assets under management as at 30 June 2015 growing 6 percent to US$54 billion (S$73 billion) from US$51 billion (S$64 billion) a year ago.
The Group’s operating expenses were up 22 percent at S$1.79 billion, partly attributable to the consolidation of OCBC Wing Hang.
Excluding OCBC Wing Hang, operating expenses were 8 percent higher.
Net allowances for loans and other assets were S$144 million, a 36 percent increase (29 percent excluding OCBC Wing Hang) from S$107 million a year ago.
Income from associates and joint ventures of S$191 million was significantly higher than S$35 million in 1H14, largely attributable to Bank of Ningbo’s contribution as an associated company of the Group. Annualised return on equity for 1H15 was 13.3 percent, lower than 14.9 percent a year ago, largely due to the dilutive impact arising from the rights issue in the third quarter of 2014.
Net allowances for loans and other assets were S$80 million in 2Q15, as compared to S$66 million a year ago.
Portfolio allowances amounted to S$32 million for the quarter, while specific allowances for loans, net of recoveries and write-backs, were S$47 million and represented an annualised 9 basis points of loans.
The Group’s asset quality continued to be strong, with the NPL ratio of 0.7 percent stable year-on-year.
Healthy coverage ratios were maintained and total cumulative allowances represented 153 percent of total non-performing assets (NPAs) and 443 percent of unsecured NPAs.
Customer deposits rose 22 percent year-on-year to S$246 billion from S$201 billion, and the ratio of current and savings accounts to total customer deposits stood at 46.0 percent.
The loan-to-deposit ratio as at 30 June 2015 was 84.3 percent, lower as compared to 87.2 percent a year ago.
Excluding the consolidation of OCBC Wing Hang, the Group’s customer loans and deposits grew by 3 percent and 5 percent respectively from 2Q14.
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