Singapore's largest banks see 19% profit growth in 2Q

Find out the biggest gainer.

Singapore’s top three banks continue to grow their profits with healthy asset quality, better holding up of NIM, and potential loan growth in 2H14.

RHB reveals in a report that OCBC, DBS and UOB collectively have resilient asset quality with healthy China books. Contrary to expectations, net interest margins were relatively stable in 2Q14. DBS and OCBC were helped by their ability to price up loans in Singapore and China, while UOB saw a 2bps slip due to NIM compression at its Indonesian operations. Banks expect some margin pressure in 2H14 but NIM for the full year would be stable to slightly better than 2013.

RHB adds that sector loan growth moderated further to 2% q-o-q in 2Q14 (1Q14: 3% q-o-q), with the annualised increase of 9% a little behind targets. But banks maintained their guidance as a strengthening US economy and early signs of recovery in China provide optimism for stronger loan growth in the coming months.

Meanwhile, SNL Financial indicates that OCBC saw the highest jump in net income; the metric grew 54% to S$921 million in the second quarter from S$597 million in the prior-year period. The company said the record quarterly performance was underpinned by higher net interest income, strong noninterest income growth, mark-to-market gains in the insurance business and continued cost discipline. The company's net interest income rose 17.2% to S$1.13 billion.

SNL adds that apart from the income growth, OCBC also stands out in the group because of its asset quality. The company's nonperforming loans ratio improved by 6 basis points year over year to 0.66%, the lowest ratio among all three banks.