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RETAIL BANKING | Staff Reporter, Singapore

OCBC net profit up 22% to $1.08b

Its wealth management and insurance operations were stellar performers.

The second quarter performance of OCBC was impressive given the 22% YoY increase in its net profit to $1.08b.

According to the group, its banking, wealth management and insurance operations delivered a strong year-on-year performance, driven by growth in net interest income, fees and commissions, net trading income and profit from life assurance.

Net interest income rose 7% to $1.35b in 2Q17 from $1.26b a year ago, largely driven by strong lending growth across the Group’s corporate and consumer businesses. Customer loans growth was broad-based and rose 11% from the previous year. Net interest margin for the quarter was 1.65%, as compared to 1.68% a year ago and up from 1.62% the previous quarter.

Meanwhile, non-interest income rose 34% to $1.05b from $788m a year ago. Fees and commissions climbed 18% to $492m from higher income associated with loan and trade-related activities, wealth and fund management, credit card and brokerage.

In particular, wealth management fee income rose 45% year-on-year, partly attributable to the inclusion of the former wealth and investment management business of Barclays PLC in Singapore and Hong Kong acquired in November 2016.

In terms of net trading income, earnings grew 14% year-on-year to $140m, whilst net realised gains from the sale of investment securities was 23% higher at $54m. Profit from life assurance was significantly higher at $240m, as compared with $108m, in the preceding year, driven by higher operating profit and positive performance from Great Eastern Holdings’ investment portfolio as a result of narrowing of credit spreads and gains from favourable interest rate movements.

The improvement in earnings came with the slight uptick in operating expenses, up 6% to $992m, partly attributable to an increase in staff costs associated with the inclusion of Barclays WIM.

"Strong business momentum was achieved across all three business pillars – banking, wealth management and insurance. Income growth was broad-based, lending activities were up, AUM continued to rise, and underlying insurance business growth continued. OCBC Group maintained its healthy capital, funding and liquidity positions, and the overall loan portfolio remained sound, with the NPL ratio stable over the last three quarters," OCBC CEO Samuel Tsien said.

He added, "Stronger consumer sentiments were noted in key economies, but overall economic growth in the region is expected to only be moderate and event risks remain. We will pursue prudent business growth, focusing on our key markets and core business lines.”

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