Singapore bank OCBC’s Q3 profit surges to record on rates

By Anshuman Daga

SINGAPORE (Reuters) -Southeast Asia’s second-largest lender Oversea-Chinese Banking Corp Ltd (OCBC) beat market estimates with a 31% rise in quarterly profit to a record on Friday, powered by a surge in net interest income as banks benefit from higher interest rates.

The results rounded up a strong showing by Singapore banks after larger peer DBS Group (OTC:) reported a forecast-beating 32% jump in quarterly profit to a record high and UOB Group also posted a record quarterly profit.

Singapore banks, which boast one of the strongest capital buffers in the world, have effectively weathered the COVID-19-induced slump and are now benefiting from rebounding Asian economies.

But analysts say growth could be derailed by a big increase in U.S. interest rates – already at multi-year highs – as central banks try and tackle runaway inflation.

Singapore-based OCBC’s net profit increased to S$1.6 billion ($1.13 billion) in July-September versus the S$1.55 billion average estimate from four analysts, according to Refinitiv data.

“Net interest income grew on higher net interest margin and loan growth was sustained,” Group Chief Executive Helen Wong said in a statement on Friday.

OCBC, which counts Singapore, Greater China and Malaysia among its key markets, said allowances for credit losses declined by 6%, while net interest income surged 44% to a new high of S$2.1 billion.

The bank’s net interest margin, a key gauge of profitability, increased 54 basis points to 2.06% in the quarter.

($1 = 1.4214 Singapore dollars)

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