OCBC's profit up 15% to S$577m

Thanks to growth in loan, trade-related and wealth management activities. Profit for the second quarter of 2010 was S$503 million.

Net interest income grew to S$827 million, a 15% increase from the same quarter a year ago. The increase was driven by loan growth of 27% across various industry sectors in Singapore and key markets overseas. The gain from robust asset growth was partly offset by lower net interest margins, though margin compression during the quarter was slower than during the preceding period.

Noninterest income increased 13% to S$586 million on strong growth in fee income and life assurance profit. Fee income grew 20% to S$299 million, contributed by higher trade-related income and fees linked to Renminbi-settled trade, as well as fund management and other wealth management-related income.

Life assurance profit from Great Eastern Holdings surged 53% to S$106 million, supported by strong underwriting results and improved investment performance as compared to a year ago. GEH’s new business premiums grew 16% year-on-year, while new business embedded value rose 23%.

Operating expenses increased by 11% year-on-year to S$618 million, reflecting higher staff costs arising from headcount growth, salary increments, as well as sales commissions and incentive compensation linked to stronger business volumes.

Net allowances of S$56 million were substantially higher than S$18 million a year ago, comprising mainly portfolio allowances for the strong loan growth. This increase in portfolio allowances had a negative bearing on the earnings for the quarter, while income from the new loans will flow through over time.

The Group’s revenue from various wealth management activities, comprising revenue from insurance, private banking, asset management, stockbroking and sales of other wealth management products, grew to S$350 million, up 29% from a year ago. As a share of total revenue, wealth management contributed 24.8%, up from 21.9% a year ago. OCBC’s private banking business continued to grow strongly, with assets under management increasing 12% in the first six months to US$29.6 billion as at 30 June 2011.