OCBC posts record Q1 profit, makes $1 billion bid to take Great Eastern private By Reuters

By Yantoultra Ngui

SINGAPORE (Reuters) -Singapore’s second-largest bank Oversea-Chinese Banking Corp (OCBC) posted on Friday a better-than-expected 5% rise in first-quarter profit and forecast its net interest margin at the higher end of a 2.20% to 2.25% range for the full year.

Net interest margin, a key profitability gauge for banks, declined slightly to 2.27% during the quarter from 2.30% a year earlier.

OCBC had provided the net interest margin guidance range in February.

It now expected to achieve higher end of the range if rate cuts are less than originally expected, according to OCBC’s Group Chief Executive Helen Wong in presentation slides accompanying the results.

OCBC maintained 2024 targets of low single-digit loan growth, credit costs between 20 to 25 basis points and 50% dividend payout ratio target, the slides showed.

“While some recent economic indicators are looking more favourable, near-term risks remain, such as heightening geopolitical volatility arising from ongoing wars and the outcome of a number of key elections this year,” Wong said in a statement.

OCBC, which is also Southeast Asia’s No. 2 lender, said January-March net profit climbed to S$1.98 billion ($1.46 billion) from S$1.88 billion a year earlier, driven by stronger operating profit.

That beat the mean estimate of S$1.77 billion, or a 5.9% year-on-year decline, from four analysts polled by LSEG.

OCBC’s results rounded up strong first-quarter earnings from Singapore banks that all beat market expectations amid a higher-for-longer interest rates environment globally.

The city-state has benefited from strong inflows from wealthy clients in Asia, including in China, as well as from Europe and the Americas, drawn in by its political stability.

In the first quarter, OCBC reported a 1% rise in wealth management assets under management to S$273 billion from a year earlier.

Larger peer DBS Group (OTC:) posted this month a 15% jump in first-quarter net profit that trumped forecasts. It added full-year earnings for 2024 were expected to exceed the record result.

Smaller peer United Overseas Bank (OTC:) (UOB) posted on Wednesday a smaller-than-expected 2% drop in first-quarter profit and said it was confident of preventing further declines in its net interest margin.

OCBC’s return on equity was 14.7% in the first quarter, unchanged from the same period of 2023.

($1 = 1.3519 Singapore dollars)