OCBC posts 12% YoY drop in Q3 net profit

Net interest income fell 11% YoY and 4% QoQ.

OCBC’s Q3 net profit dropped 12% YoY to $1.03b from $1.17b a year ago, but jumped 41% from Q2’s $730m thanks to a fall in allowances, according to the bank's SGX filing.

Net interest income fell 11% YoY and 4% QoQ to $1.42b in the third quarter due to lower market rates, which also led to a six bp QoQ and 23bp YoY contraction in net interest margin.

Net allowances of $350m were set aside in Q3 compared to $750m in Q2. Net fee income rose 14% to $501m from broad-based fee growth, which benefited from a pick-up in customer activities following the phased re-opening of the economy.

Earnings per share was $0.73 for the period.

Per segment, wealth management reported positive results, with fees rising 24% QoQ and 4% YoY to reach the pre-COVID-19 levels of the previous year, for a total of $252m.

However, trading income was 21% lower QoQ at $255m, mainly from a decline in treasury income and lower mark-to-market gains in Great Eastern’s investment portfolio.

On the other hand, customer flow income rose 4% QoQ and 14% YoY to $173m. Net gains from the sale of investment securities were $35m as compared to $55m a year ago, OCBC said.

Total non-performing assets (NPAs) reached $4.25b as of end-September, 2% QoQ below the $4.35b a quarter ago as recoveries, upgrades and write-offs more than offset the new NPA formation.

As of 30 September, customer loans were up 1% QoQ and 2% YoY to $269b in constant currency terms. The QoQ growth was mainly coming from Singapore, and lending to our network customers in Australia and the United Kingdom. CASA deposits grew 4% QoQ to $182b, driving the CASA ratio to a new peak of close to 60%.

The loans-to-deposits ratio was 86.2%, slightly above the 85.4% in the previous quarter. Group CET1 CAR was 14.4%.