OCBC Q2 profit up 14% at $1.94 billion, says on track to meet 2024 targets

SINGAPORE - Singapore's second-largest bank Oversea-Chinese Banking Corp (OCBC) reported on Friday (Aug 2) a stronger-than-expected 14 per cent year-on-year jump in second quarter net profit and said it was firmly on track to meet its 2024 targets.

OCBC, which is also Southeast Asia's second-largest lender by assets, said its April-June net profit rose to S$1.94 billion from S$1.71 billion a year earlier, driven mainly by income growth and a decline in allowances.

This was above the mean estimate of S$1.82 billion or expectations for a 6.4 per cent on-year rise from five analysts polled by LSEG.

"We still remain confident in the resilience of the Asean economy," OCBC's Group CEO Helen Wong said in an earnings briefing, adding that the macroeconomic outlook and opportunities in Southeast Asia remained strong.

OCBC maintained its 2024 earnings guidance of net interest margin (NIM) in the range of 2.20 per cent to 2.25 per cent, low single-digit loan growth, credit costs between 20 to 25 basis points and 50 per cent dividend payout, CEO Wong said.

She added that NIM could potentially come in at the lower end of the guided range. This compares to its earlier expectation in May for NIM in the higher end of the range.

Shares of OCBC were relatively unchanged Friday after the earnings announcement.

The bank's earnings followed that of smaller peer United Overseas Bank (UOB) which on Thursday reported a 1 per cent on-year rise in second quarter net profit to S$1.43 billion, in line with estimates.

The results from UOB and OCBC this week kick start the current earnings season for Singaporean banks, which have benefited from strong inflows of wealth into the Asian financial hub thanks to its political stability, low taxes, and policies favourable towards family offices and trusts.

Larger peer DBS is due to announce its results on Aug 7.

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OCBC's second quarter result showed a 17 per cent on-year jump in wealth management fees to S$212 million, while asset under management rose 2 per cent to record level of S$279 billion.

Its private banking arm, Bank of Singapore, has been recruiting more relationship managers as trading activities by customers are picking up in anticipation of rate cuts, its CEO Jason Moo said during the briefing.

OCBC, declared an interim dividend of 44 Singapore cents a share, up 10 per cent from a year ago.

Return on equity climbed to 14.2 per cent in the second quarter from 13.5 per cent in the same period of 2023.

Net interest margin, a key profitability gauge, declined to 2.20 per cent during the quarter from 2.26 per cent a year earlier.