OCBC Q2 profit jumps 28% to $1.48 billion, beating forecasts

SINGAPORE – OCBC Bank reported on Wednesday (Aug 3) a better-than-expected increase in second-quarter earnings from a year ago as it benefited from rising interest rates.

Net profit for Singapore’s second-biggest local bank came in at $1.48 billion for the three months to June, up 28 per cent from $1.16 billion for the same period a year ago. It also blew past the $1.26 billion forecast by analysts in a Bloomberg poll.

Its latest results reversed a 10 per cent decline in first-quarter earnings that came on the back of lower wealth management fees, trading income and life insurance profit.

The bank declared an interim dividend of 28 cents per ordinary share, up from 25 cents last year.

Group chief executive Helen Wong said overall economic growth in the bank’s key markets is expected to remain positive this year but at a slower pace due to heightened headwinds in the operating environment.

She added in the bank’s results statement that net interest income reached a new high from loan growth and the bank’s balance sheet benefited from rising interest rates.

OCBC’s second-quarter net interest income rose 16 per cent year on year to a record $1.7 billion, largely driven by asset growth and an expansion in the bank’s margin.

Net interest margin – a key gauge of banks’ profitability – rose 13 basis points to 1.71 per cent as asset yields outpaced higher funding costs amid the rapidly rising interest rate environment.

Non-interest income stood at $1.18 billion, up 6 per cent from a year ago mainly from higher trading income and life insurance profit.

However, net fee income dropped 15 per cent to $477 million, largely due to lower wealth management, brokerage and investment banking fees, in line with weaker investment sentiments globally.

Loan and trade-related fees grew on the back of higher lending and trade volumes, and credit card fees were also higher amid broader reopening of economies and as activities resumed.

Ms Wong added: “Despite heightened market volatility, we are pleased to see net new money inflows in our wealth management business, as well as healthy new insurance sales.

OCBC’s wealth management income – from areas such as insurance, private banking, asset management and stockbroking – grew 8 per cent to $1.03 billion and made up 36 per cent of the group’s income in the second quarter.