OCBC Bank has posted a record quarterly net profit of $676 million during the first three months of 2010, exceeding analysts’ estimates of about $500 million for Q1.
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Net profit was up 24 percent on-year on the back of a significant reduction in allowances and broad-based growth in non-interest income. OCBC also saw a 12-percent increase in overall loans and expects the momentum to continue.
OCBC’s better financial showing has been buoyed by the economic recovery, enabling it to increase lending and reduce its provisions significantly.
The overall loan book of the bank grew 12 percent on the back of robust home sales and commercial borrowing.
Bank of Singapore, its new private banking arm, contributed five percent of the loan growth, and OCBC anticipates loan growth to stay strong.
OCBC acquired the private banking business of ING in Asia late last year and the unit has been renamed Bank of Singapore.
"We’re expecting for the year roughly, somewhere in the range for Singapore of high single digit, somewhere in the teens in Malaysia, 20 to 30 percent in Indonesia, 20 to 30 percent in China. So if you add it all up, it’s low teens on a consolidated basis," said Mr. David Conner, CEO of OCBC.
The 68-percent surge in fee income also boosted the bank’s bottomline in Q1. However, net interest income was down five percent at $704 million, as low interest rate environment affected the margins.
OCBC hopes to see interest rates recover this year but cautions about some economic uncertainties. “One expects demand to be pretty soft in the Euroland area such that the authorities are likely to keep rates low for a longer period of time,” said Mr. Conner.