SINGAPORE – A strong growth in wealth management boosted OCBC’s non-interest income in the first quarter to a new high, lifting the bank’s net profit by 5 per cent.
Earnings for the quarter ended March 31 were $1.97 billion, from $1.88 billion a year ago, beating a forecast of $1.79 billion by analysts in a Bloomberg poll.
Net interest income declined by 5 per cent to $2.22 billion, amid a lower interest rate environment. Net interest margin (NIM) was 1.76 per cent, 28 basis points below 2.04 per cent a year ago.
Non-interest income rose 23 per cent to $1.61 billion, and comprised more than 40 per cent of total income.
Net fee income grew 24 per cent to $675 million on broad-based growth. Wealth management fees increased by 34 per cent with robust contributions across all wealth product channels on increased customer activities. Investment banking, trade-related and loan-related fees were also higher compared to the previous year.
The group’s wealth management income, comprising income from private banking, premier private client, premier banking, insurance, asset management and stockbroking, was $1.48 billion, up 11 per cent year-on-year.
Income from the wealth business made up 39 per cent to the group’s total income, up from 37 per cent in the previous year.
In his first quarter as OCBC chief executive, Mr Tan Teck Long said resilient performance across banking, wealth management and insurance helped to cushion the impact from lower interest rates.
“We achieved a new high for non-interest income, led by our wealth business, which helped us offset lower net interest income amid a low-interest rate environment,” he said.
Wealth fees grew 34 per cent year-on-year to hit $422 million.
“Against this backdrop, we continued to make disciplined strategic investments to strengthen our long-term growth engines,” he said.
OCBC on May 4 said it struck a deal to acquire parts of HSBC’s wealth and premier banking portfolio in Indonesia, reportedly beating out UOB and other banks such as DBS, Malaysia’s CIMB Group and Japan’s Sumitomo Mitsui.
Mr Tan said that the acquisition is aligned with the bank’s new corporate strategy to grow and deepen its wealth business in Indonesia, as well as strengthens its position as one of the top privately owned banks in the country.
He noted that HSBC’s wealth and premier banking portfolio in Indonesia is a high-quality one with assets under management of $6.6 billion, bringing scale and synergy to the group.
Looking ahead, Mr Tan said global conditions remain uncertain amid geopolitical tensions and elevated inflation risks.
Much of the near-term outlook will depend on how the war in the Middle East, with its impact on energy supply and prices, evolves, while the ongoing trade tariff situation is also being closely monitored, he noted.
But OCBC is well-positioned to navigate uncertainties with its strong capital, funding and liquidity position, as well as diversified income streams and disciplined risk management, he said.
OCBC is the last of the three local banks to report earnings.
UOB on May 7 posted a 4 per cent fall in first-quarter net profit to $1.44 billion on the back of what it called a softer operating environment. On April 30, DBS said its first-quarter earnings grew 1 per cent to $2.93 billion on record wealth management fees.
