OCBC's Q1 profit plunges 43% YoY to $698m

Banking and insurance operations suffered tremendous losses.

OCBC recorded a 43% YoY collapse in net profit to $698m Q1 from $1.23b in 2019, brought about by lower insurance income and an increase in allowances due to the coronavirus pandemic, a bourse filing has revealed.

On a QoQ basis, net profit slumped 44% from $1.24b in Q4 2019. Overall group revenue dipped 7% YoY.

The bank’s net profit from its insurance operations plunged by a whopping 94% to $18m from $290m in Q1 2019, whilst net profit from banking operations crashed 28% YoY to $680m as income growth was offset by the rise in allowances.

Total allowances skyrocketed 165% to $658m as allowances for impaired and non-impaired assets soared.

On the other hand, wealth management fees grew 32% to $291m, but its private banking arm Bank of Singapore’s assets under management (AUM) dipped 4% due to positive net new money offset by negative market incomes.

Group net interest income inched up 6% YoY to $1.62b driven by growth in customer loans. Net interest margin remained flat at 1.76% on a yearly basis as OCBC focused on current account and savings account (CASA) deposit gathering and a shift to longer tenure loans which mitigated the low interest rate environment.

Cost-to-income ratio rose 3.6ppt to 44.5% but return on equity slid 6ppt to 6%.

OCBC maintained a robust capital and liquidity position, with Common Equity Tier 1 CAR inching up 0.1ppt YoY to 14.3% and all-currency LCR climbing 1 ppt YoY to 151%.