OCBC’s profits surge 54% to $921m in Q2

Income also hits a record high.

Oversea-Chinese Banking Corporation Limited reported a net profit after tax of S$921 million for 2Q14, an increase of 54% from S$597 million a year ago.

Net interest income climbed 17% from S$961 million a year ago to a new high of S$1.13 billion in 2Q14, led by strong asset growth with increased net interest margin. Customer loans rose 12% year on-year to S$177 billion, with broad-based growth across all key customers segments and geographies.

According to OCBC, the record quarterly performance was underpinned by higher net interest income, strong non-interest income growth, mark-to-market gains in the insurance business and continued cost discipline.

Here’s more from OCBC:

Net interest margin for the quarter was 1.70%, 6 basis points higher than 1.64% in 2Q13. The improvement in net interest margin arose from higher loan spreads and better returns from money market activities.

Non-interest income rose 40% to S$850 million from S$606 million in 2Q13. Fee and commission income of S$353 million increased 2% from a year ago, led by higher wealth management and trade-related income.

Net trading income, primarily treasury-related income from customer flows, of S$133 million was 48% above the previous year, while dividend income grew 53% to S$56 million. Profit from life assurance for the quarter was S$220 million, significantly higher as compared to S$16 million a year ago.

This was largely attributable to higher mark-to-market gains in Great Eastern Holdings’ Non-Participating Fund as a result of favourable interest rates and tighter credit spreads.

The Group’s operating expenses were well-managed, rising 6% to S$760 million from S$718 million in 2Q13, with the increase largely attributable to higher staff costs linked to headcount growth and annual salary increments.

The cost-to-income ratio was 38.5%, a marked improvement from 45.8% the previous year. Net allowances for loans and other assets were S$66 million, lower as compared to S$83 million a year ago. The Group’s non-performing loans (“NPL”) ratio of 0.7% was unchanged year-on-year.