November 4, 2019 / 11:47 PM / 7 months ago

UPDATE 2-Singapore's OCBC quarterly profit drops, but wealth management fees grow

* July-Sept profit slides 6% on charge for Indonesian unit

* Wealth management fees jump, net interest income also higher

* Outlook challenging amid trade war, potential new rivals (Recasts and adds CEO comment)

By Anshuman Daga

SINGAPORE, Nov 5 (Reuters) - Oversea-Chinese Banking Corp Ltd, Singapore’s second-biggest listed bank, said quarterly profit fell 6%, hurt by a one-off charge for its Indonesian unit that overshadowed growth for its wealth management and lending businesses.

In particular, higher wealth management fees helped offset a challenging environment as Singapore narrowly 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 markets.

“Our performance for this quarter underscored the competitive strength of our diversified business franchise,” CEO Samuel Tsien said in a statement.

“Global and regional economic growth continued to slow, and geo-political event risks have increased. We shall remain vigilant and will maintain prudent risk management practices while exercising disciplined cost management.”

Net profit came 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 average estimate of five analysts, according to data from Refinitiv.

Excluding the one-off charge at its Indonesian unit which was related 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 booked a year earlier.

Net wealth management fees rose 11% year on year, while OCBC’s net interest income grew 6% to S$1.60 billion and net interest margin rose 5 basis points to 1.77%.

After clocking robust growth rates in recent years, Singapore’s banks face a challenging outlook as interest rates soften and loan growth moderates. Its central bank eased monetary policy for the first time in three years last month.

The sector is also facing its biggest shake-up in two decades after the central bank in August kicked off the application process for new digital banking licenses. Ride-hailing firm Grab and Singapore Telecommunications have expressed interest in applying for the licences, sources have said.

OCBC shares were down 0.7% in Tuesday morning trade, underperforming a broader market that was up 0.2%. ($1 = 1.3588 Singapore dollars) (Reporting by Anshuman Daga; Additional reporting by Nikhil Kurian Nainan in Bengaluru and Joe Brock in Singapore; Editing by Edwina Gibbs)

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