OCBC’s Q3 Earnings Jumped 21% to $1.81 Billion

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On Friday, OCBC Bank released its third-quarter earnings, which were enhanced by record net interest income. However, the CEO expressed concern about the macroeconomic future.

Per Refinitiv poll projections, the second-largest bank in Singapore had a 21% year-over-year increase in net profit, reaching $1.81 billion.

OCBC’s net profit for the first nine months increased by 32% to a record high of $5.4 billion, the first time it has exceeded $5 billion for the same period.

The largest lender DBS reported a 16% year-over-year growth in third-quarter net profit to $2.59 billion on Monday, while UOB reported a 5% increase in core earnings to $1.48 billion on October 26. OCBC’s findings bring the season of Singapore banks’ earnings to a close.

While rising rates have helped margins, they also suggest that lenders will face more hurdles in the global climate as there will be less demand for loans.

Group Chief Executive Helen Wong stated that OCBC anticipates net interest margin (NIM), a crucial indicator of profitability, to be approximately 2.25 percent for the entire year.

This is greater than the 2.2% NIM it had previously predicted for the year, although it is less than the 2.28 percent NIM in the first nine months of 2023.

In addition, the bank anticipates that 2023 will see a return on equity of above 14%, although loan growth will be in the low to mid-single digit range due to market conditions, as opposed to previous estimates of low-to-mid single-digit growth.

According to Ms. Wong, recent geopolitical tensions have put pressure on the macroeconomic climate, and it is unclear when interest rates will be lowered and whether they will worsen.

She said that business and Singapore home loans have performed better. “Trade loans are not doing very well because the trade volume around the region has not rebounded as much as people have hoped for,” she said.

“Even though we are on track to meet our 2023 goals, we still need to exercise extreme caution and ensure that our capital, liquidity, and funding base are solid.”

Net interest income increased 17% in the third quarter to reach a record-breaking $2.46 billion. It was propelled by a 6% increase in assets and a 2 percentage point rise in NIM to 2.27 percent.

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