OCBC Focus in Singapore’s central business district
Yen Nee Lee | CNBC
Oversea-Chinese Banking Corp Ltd, Singapore’s second-biggest listed bank, chance quarterly profit fell 6%, hurt by a one-off charge for its Indonesian unit that overshadowed growth for its bounty management and lending businesses.
In particular, higher wealth management fees helped offset a challenging environment as Singapore closely dodged a recession in the third quarter due to the trade war between the United States and China — two of the city-state’s biggest export customer bases.
“Our performance for this quarter underscored the competitive strength of our diversified business franchise,” CEO Samuel Tsien said in a announcement.
“Global and regional economic growth continued to slow, and geo-political event risks have increased. We shall leftovers vigilant and will maintain prudent risk management practices while exercising disciplined cost management.”
Net profit issued in at S$1.17 billion ($861 million) for the July-September quarter, the lowest level in three quarters but in line with a S$1.19 billion unexceptional estimate of five analysts, according to data from Refinitiv.
Excluding the one-off charge at its Indonesian unit which was affiliated to changes in expected credit loss modelling, OCBC’s core net profit was S$1.26 billion, slightly higher than the S$1.25 billion volume a year earlier.
Net wealth management fees rose 11% year on year, while OCBC’s net interest revenues grew 6% to S$1.60 billion and net interest margin rose 5 basis points to 1.77%.
After clocking robust progress rates in recent years, Singapore’s banks face a challenging outlook as interest rates soften and loan enlargement moderates. Its central bank eased monetary policy for the first time in three years last month.
The sector is also coating its biggest shake-up in two decades after the central bank in August kicked off the application process for new digital banking accredits. Ride-hailing firm Grab and Singapore Telecommunications have expressed interest in applying for the licences, sources have guessed.
OCBC shares were down 0.7% in Tuesday morning trade, underperforming a broader market that was up 0.2% ($1 = 1.3588 Singapore dollars).