OCBC net profit up 27% S$7.02b in FY2023; final dividend is 42 cents 

Total dividend of 82 cents is 12% higher than the previous fiscal year.

OCBC has reported a S$7.02b net profit for FY2023, 27% higher than a year ago, its latest financial statement showed. This is the first time that OCBC's profits crossed the S$7b mark.

Banking operations net profit also rose 27% to S$6.39b over the same period. 

A final dividend of 42 cents per share had been proposed by OCBC’s board, up 40 cents from a year ago. This brings the total dividend for FY2023 to 82 cents per share– 12% or 14 cents higher than the previous fiscal year.

This represents a total dividend payout of S$3.69b, with a 53% payout ratio. 

OCBC CEO Helen Wong expressed delight in reporting another year of record profit for the bank.

“Broad-based income growth across business segments drove total income to an all-time high, whilst expenses were well controlled. Strong credit discipline was reflected by lower NPL ratio and higher allowance coverage. Our robust performance for 2023 is a testament to the strength of our well-diversified business franchise and reflected the results of our transformation and growth strategy," Wong said in a statement.

However, looking ahead, Wong warned of challenges in the global macro environment, including changes in monetary policies. Other points of concern are the pressures brought about by inflation, major elections, and rising geopolitical tensions.

"Nonetheless, we believe that Asia holds immense growth potential. We remain steadfast in executing our ASEAN-Greater China growth strategy to deliver sustainable value for our stakeholders. Our strong capital, liquidity and funding positions enable us to seize opportunities as they arise, while providing adequate buffers to navigate uncertainties," Wong said.

Higher total income, lower fees
OCBC's operating expenses rose 8% to S$5.22b, from S$4.84b previously. Operating profit before allowances rose 28% to S$8.28b, from only S$6.45b in the previous fiscal year.

Total income for FY2023 rose to a record S$13.5b, which the group attributed to its “diversified income streams” as well as a record-high net interest income of S$9.65b– 25% higher than in 2022. Non-interest income rose 7% to S$3.86b.

Fees and commissions fell 3% to just over $1.8b, compared to S$1.85b for FY2022. Whilst loan and credit card fees rising in 2023 compared to 2022 levels, it was offset by lower wealth-related fees as customer activities in this segment remained subdued, OCBC said in its financial highlights report.

Despite the lower wealth fees, OCBC’s wealth management income– comprised of income from insurance, private banking, premier private client, premier banking, asset management, and stockbroking– still made up 32% of the group’s total income. 

Income from all these segments rose 26% to S$4.32b in FY2023, whilst assets under management (AUM) expanded 2% to S$263b.

Trading income rose 8% to breach the billion-dollar mark at S$1.004b in FY2023 from the $929m in FY2022, driven by “record customer flow treasury income,” according to the bank.

Income from life and general insurance remained at the same levels, rising 1% to S$808m from S$803m previously. 

Great Eastern Holdings’ new sales and new business embedded value (NBEV) were S$1.66b and S$762m, respectively.  NBEV margin was higher at 45.9%.  GEH’s embedded value was S$17.3b as of 31 December 2023.

Fourth quarter profit up 12%
Group net profit for the last three months of FY2023 rose 12% to S$1.62b, thanks to a 2% increase in operating profit and lower allowances.

Net interest income is 3% at $2.46b in Q4 compared to the same quarter in FY2022. Net interest margin moderated 2 basis points to 2.29%, due to higher funding costs that offset asset yields.

Non-interest income rose 25% to S$811m, with net fee income rising 16% to S$460m, and net trading income rose 22%.

Operating expenses for the quarter was S$1.31b, 19% higher, a result of higher staff costs and other expenses, OCBC said.