OCBC reports record net profit of S$5.75b in 2022

Full-year dividend is at 68 cents per share, 28% higher than in 2021.

Oversea-Chinese Banking Corporation (OCBC Bank) saw its net profit jump to a record S$5.75b in 2022. 18% higher compared to a year ago, according to the bank’s latest financial statement.

The record earnings were attributed partly to the strong growth in its net interest income, lower cost-to-income ratio, and a “well-diversified business franchise well-positioned to capture opportunities in a rapidly changing operating environment,” the bank said in its bourse filing.

Full-year dividend is 68 cents per share, 28% higher than the 15 cents paid out in 2021. It represents a payout ratio of 53%.

“Looking ahead, our key markets in Asia are expected to remain resilient, and growth is forecasted to outpace the global average in 2023,” CEO Helen Wong said regarding the bank’s results announcement.

“We are optimistic that the reopening of China and Hong Kong SAR  could further spur regional economic growth. We enter the new year with confidence as we drive for  sustainable growth and deliver long-term value to our shareholders,” Wong added.

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The bank’s interest income grew 31% to a record S$7.69b in FY2022, underpinned by a 37-basis point expansion  in net interest margin (NIM) and 6% growth in average assets.  

Non-interest income was 16% lower at S$3.99b, with sale from investment securities netting a loss of S$206m.

Net fee income fell 18% to S$1.85b. OCBC attributed the decline to softer wealth management fee income, which fell to S$3.89b for the whole of 2022 compared to S$4.01b in 2021. Wealth management income– comprising of consolidate income from insurance, private banking, premier private client, premier banking, asset management, and stock broking– contributed to 33% of OCBC’s total income.

The group’s wealth management assets under management (AUM) inched up to S$258b compared to S$257b in 2021, driven by growth in net new money inflows which offset negative  market valuation.  

OCBC also reported a net loss from the sale of investment securities amounting to S$206m, compared to net gain of S$92m in 2021. This was attributable to bond portfolio rebalancing and positioning amidst changing market conditions.  

Net trading income climbed 9% to S$834b, compared to S$763 million a year ago, from higher non-customer flow treasury income partly driven by gains from hedging activities.

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Operating expenses grew 5% to S$5.03 billion, led by higher staff and IT-related costs. OCBC said that the increases were largely due to annual salary adjustments and headcount growth, and continued investments to enhance technology capabilities. Cost-to-income ratio improved to 43% from 45% in FY2021.

“Looking ahead, our key markets in Asia are expected to remain resilient, and growth is forecasted to outpace the global average in 2023,” CEO Helen Wong said regarding the bank’s results announcement.