While the bank’s net interest income was impacted by lower market rates, its banking and wealth management businesses saw strong quarter-on-quarter fee-based growth, and its insurance franchise reported strong sales and new business growth.
OCBC’s net profit for the third quarter of 2020 was S$1.03 billion ($760 million), up 41 percent from the previous quarter’s S$730 million and 12 percent lower compared to a year ago, according to financial results published by the bank on Thursday.
The growth in profit was largely a result of a fall in allowances, OCBC said. The bank set aside S$350 million in allowances during the quarter, which included a management overlay of S$150 million, compared to S$750 million in the previous quarter.
Net interest income declined 4 percent from last quarter’s S$1.42 billion from lower rates – an 11 percent decline from the same period in 2019. At the same time, non-interest income rose 6 percent to S$1.12 billion, led by higher trading income and insurance profit.
The bank reported growth in wealth management fees of 24 percent on-quarter and 4 percent year-on-year to S$252 million.
Assets under management at Bank of Singapore, OCBC’s private banking subsidiary, grew 3 percent from the previous quarter and 5 percent year-on-year to $116 billion (S$159 billion), underpinned by net new money inflows and better market valuations.
At Great Eastern, OCBC’s insurance arm, total weighted new sales rose 51 percent quarter-on-quarter to S$433 million, supported by improved sales both in Singapore and Malaysia, while New Business Embedded Value was 47 percent higher at S$160 million, while the NBEV margin was 37 percent.
OCBC said the full extent of the lagging economic impact of the crisis will only likely have more visibility next year. However, it said it is well-positioned for recovery and is focused on driving long-term sustainable value.
With the outlook still uncertain, it is most important that we continue to strengthen our capital and balance sheet. This will position us well for the crisis and enable us to emerge well-prepared for new opportunities when the market recovers,» Samuel Tsien, OCBC group CEO, said in a statement.
Singapore’s two other listed banks already reported their quarterly earnings – DBS saw its profits fall by 20 percent from the same period last year to S$1.3 billion, while UOB reported a 40 percent decline to S$668 million.