OCBC reports record net profit of S$3.59b in H1; H1 dividend at 40 cents

The dividend is 43% or 12 cents higher than in H1 2022.

OCBC’s reached a new net profit record for the first half of 2023, carried by its record income.

The bank’s net profit rose 38% year-on-year to S$3.59b during the first six months of the year. This was driven by net interest income growing by 48% to S$4.73b, attributable to a 6% increase in average assets and a 65-basis point expansion in its net interest margin (NIM) to 2.28%, the bank’s latest financial report showed.

An interim dividend of 40 cents has been announced, 43% or 12 cents higher than in H1 2022. This represents a payout ratio of 50% of the group’s H1 2023 net profit, OCBC said. The Scrip Dividend Scheme will not be applicable to the interim dividend.

“We have delivered a robust set of results for the first half of 2023. The Group achieved record net profit, which crossed the S$3b mark for the first time on the back of strong contributions from the group’s banking, wealth management and insurance franchise,” CEO Helen Wong said.

Higher trading, investment and insurance income drove OCBC’s non-interest income to rise 3% to S$2.08b in H1, from S$2.02b in the previous year. 

However, net fee income fell by 12% to S$883m, bogged down by softer wealth management-related fees due to a purported decline in customer activities amidst a “risk-off investment environment,” OCBC said. Higher loan-related and investment banking fees slightly offset the lower wealth fees.

Net trading income came at S$513m, whilst net gains from sale of investment securities is S$38m against a net loss of S$78m in H1 2022.

ALSO READ: OCBC, UnionPay bolster cross-boundary digital payment feature

Profit from insurance rose 10% to S$500m, thanks to improved investment performance. Net weighted new sales and new business embedded value (NBEV) for Great Eastern Holdings were S$726m and S$351m respectively, whilst the NBEV margin improved to 48.4% due to a favourable product mix.

For the second quarter, OCBC’s net profit was S$1.71b, 34% higher than in Q2 2022.

Strong income growth drove the rise during the quarter. Net interest income rose 40% to S$2.39b, underpinned by asset growth and a 55-basis point increase in NIM to 2.26%.

Non-interest income grew 11% to S$1.07b, mainly from net gains from the sale of investment securities and higher profit from insurance, partly offset by lower fee and trading income, OCBC said.

Operating expenses of S$1.33b were 2% above Q2 2022, led by an increase in staff costs. Cost-to-income ratio (CIR) was lower at 38.5%.

Total allowances were higher at S$252m, compared to S$72m in Q2 2022, driven by an increase in allowances for non-impaired assets.