Net profit at Singapore’s Oversea-Chinese Banking Corporation rose in the first three months of 2017, rebounding from a Q4 loss as revenues from life assurance and its recently-acquired wealth management business made up for a dip in net interest income.
Adjusted net profit after tax rose to S$973m for the quarter ended March, up 14 per cent from the same period a year earlier and rising 23 per cent from the December quarter.
Net interest income was down 3 per cent year on year at S$1.27bn despite average customer loans rising 5 per cent, as net interest margin contracted 13 basis points to 1.62 per cent. The bank attributed the squeeze on net interest margin to reduced customer customer loan yields and “excess liquidity placed in high quality but lower yielding interbank placements.”
However, non-interest income enjoyed a year-on-year rise of 30 per cent to S$977 million as fee and commission income jumped 29 per cent to S$481m. Another boost came from a 70 per cent rise in wealth management income courtesy the wealth and investment management unit OCBC purchased from Barclays in November.
Profit from life assurance jumped as well, rising 111 per cent year on year to S$176m in Q1. That helped push overall wealth management income up 50 per cent to S$724m for the period, accounting for nearly a third of total income.
Operating expenses rose 5 cent in Q1 to S$973m thanks to an increase in staff costs, partly in connection with the bank’s Barclays WIM acquisition.
Non-performing loans totalled S$2.87bn as of March 31, down marginally from the end of 2016 but up 29 per cent from a year ago. That was equivalent to 1.3 per cent of total loans, a rise of 0.3 percentage points from Q1 2016. OCBC said the increase “was mainly from the classification of a few large corporate accounts associated with the oil and gas services sector.”