OCBC profits dropped by 14 percent in Q1
(2 May 2016 – Singapore) Oversea-Chinese Banking Corp. (OCBC), said first-quarter profit decreased by 14 percent.
The drop was attributed to provisions for bad loans more than doubling and a decline in contribution from its insurance unit.
Net income fell to S$856 million (A$836 million) in the first three months from S$993 million the previous year.
“Given the weak economic environment and further stresses noted especially in the oil and gas support services sector, we continued to adopt a conservative approach and this was reflected in the increased level of provisions set aside for the quarter,” Chief Executive Officer Samuel Tsien said in the statement.
The bank’s nonperforming loans rose to S$2.15 billion at the end of March, around 60 percent higher than a year ago, OCBC said.
Net interest income at OCBC grew 5 percent to S$1.31 billion from a year earlier as customer loans rose 1 percent in constant-currency terms, the company said. That was offset by a 12 percent decline in non-interest income to S$753 million, partly because of a profit slump at its insurance arm.
The lender’s net interest margin, a measure of lending profitability, rose to 1.75 percent in the first quarter, compared with 1.62 percent a year ago and 1.74 percent in the fourth quarter.
OCBC said that its private banking unit, Bank of Singapore was set to finalise the US$320 million (A$420 million) acquisition of Barclays wealth division in Singapore and Hong Kong by the end of 2016.
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