Oversea-Chinese Banking Corp has reported a 10% y-o-y dip in earnings for 1QFY2022, on the back of a 9% dip in revenue in the same period.
For the three months to March 2022, the bank reported earnings of $1.36 billion, with revenue coming in at $2.64 billion.
OCBC attributes the drop to a “robust customer and investment activities arising from favourable market conditions” seen in the year earlier 1QFY2021 period.
Revenue from non-interest business, which includes wealth management fees, trading income and life insurance profit, was down 23% y-o-y to $1.14 billion.
On the other hand, thanks to a 3 basis point gain in net interest margin to 1.55%, the bank’s net interest income was up slightly by 1% to $1.5 billion.
The revenue growth was however offset by higher operating costs of 5%, specifically in IT spending and headcount.
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As at March 31, OCBC’s CET1 CAR was 15.2%.
For 1QFY2022, the bank’s non-performing loan ratio was 1.4%, a slight improvement over 1.5% seen in 1QFY2021. Total allowances was just $44 million, versus $161 million in the year-earlier quarter.
“Our results for the first quarter underscored the competitive strength of our diversified business franchise,” says group CEO Helen Wong.
“Balanced performance across our banking, wealth management and insurance businesses has continued to allow us to deliver resilient earnings amid the current operating environment,” she adds.
Wong describes the bank’s overall loan portfolio as “sound”. Going forward, she sees the gradual re-opening of economies and borders in Southeast Asia to drive a further rise in economic activities.
At the same time, the bank, which has laid down its growth ambitions in the so-called Greater Bay Area including Hong Kong and Guangzhou, will continue to keep a close eye on the evolving pandemic situation in Greater China.
“Looking ahead, we will be vigilant to risks arising from geopolitical tensions, rising inflation and the pace of policy normalisation. We will continue to be disciplined and prudent in pursuing our strategy to excel for sustainable growth,” adds Wong.
