OCBC NIM falls to 1.9% in 1Q11

OCBC 1Q 2011 core net profit of $596 million was in line with expectations except for the disappointment in lower NIM.

OCBC's NIM fell 6 basis points to 1.9 per cent, said Phillip Securities, in a statement.

The decline in the NIM was mainly due to four factors. The first is that the 4Q 2010 NIM was higher by 2 basis points due to one off reclassification adjustment.

Second, change in loan mix which saw substantial increase in bill receivables. These instruments are safer but also lower yielding hence resulted in lower NIM.

Third, pressures from competition especially in loan pricing for corporate banking segment.

Fourth, mortgage refinancing which saw borrowers switching out from fixed to floating rates.

Phillip Securities said, NIM will remain soft due to the low interest rate environment as well as from more intense competition.