OCBC's Q2 profit up 54% to $921m
OCBC Bank, Singapore's No. 2 lender, posted a 54 per cent jump in quarterly profit yesterday, capping a strong earnings season for banks here on growth in China-related trade finance and wealth services.
The bank earned $921 million in the three months ending in June, compared with $597 million a year earlier. The profit was above the $796 million average forecast of six analysts polled by Reuters.
Under chief executive Samuel Tsien, OCBC has been growing outside its home country to counter South-east Asia's lowest lending margins, an expansion that included the biggest takeover of a Hong Kong bank since 2001.
OCBC's US$5 billion (S$6.2 billion) offer for Wing Hang Bank won enough investor acceptance last week for the buyer to take its target private.
"They're in a bit of a sweet spot," Paul Dowling, principal analyst at Sydney-based bank research firm East & Partners, said. "The markets will reward them off the back of this second-quarter result, given what Wing Hang delivered to OCBC in terms of forward momentum."
Mizuho Securities Asia banking analyst James Antos said Singapore lenders - in particular the biggest bank, DBS - had been winning regional market share in the China-related trade finance business.
"They have actually grabbed market share for the trade flows between China and South-east Asia from banks like HSBC and Standard Chartered.
"Five years ago you never thought anything like this would ever happen," the Hong Kong-based analyst said, adding that fears of a China meltdown were overblown.
OCBC's quarterly net interest income - the gap between what a bank makes from loans and pays on deposits - rose 17 per cent to $1.1 billion, on the back of a 12 per cent year-on-year rise in customer loans.
Contributions from insurance unit Great Eastern Holdings boosted non-interest income by 40 per cent.