OCBC reports record net profit in Q1 as strong net interest income growth boosts earnings

Singapore‘s second-largest lender, Oversea-Chinese Banking Corp (OCBC), has reported a 39% increase in first-quarter profit compared to a year ago, driven by robust net interest income expansion. OCBC, also the second-largest bank in Southeast Asia by assets, revealed a net profit of US$1.42 billion between January and March, up from US$1.02 billion during the same period last year, significantly surpassing the average estimate of US$1.31 billion from five analysts polled by Refinitiv.

Banks in Singapore have seen strong inflows from wealthy clients amid global economic uncertainty, as the nation is regarded as a financial safe haven. OCBC Group CEO Helen Wong stated that their loan portfolio stayed resilient and that their wealth management business continued attracting net new money inflows.

In the first quarter, OCBC reported a total net interest margin, an essential profitability indicator, of 2.30%, up from 1.55% a year earlier. The bank anticipates a full-year net interest margin of around 2.2%.

Although the lender has observed growth in cross-border flows following China’s reopening, it remains cautious of volatility in developed markets and geopolitical tensions. Wong stated that they would keep a close watch on tighter financial conditions that might hinder global economic growth and increase overall risks.

With key markets including Singapore, greater China, and Malaysia, OCBC’s net interest income rose by 56% to US$1.76 billion in the first quarter compared to the previous year. The return on equity also increased, growing from 10.6% in the first quarter of 2022 to 14.7% this year.

The first quarter proved to be successful for Singapore’s other major banks as well. Last week, the larger peer DBS Group reported a record-breaking 43% jump in first-quarter net profit, while United Overseas Bank posted a 74% surge in core net profit last month, reports Channel News Asia.