OCBC’s net profit for the second quarter surged due to an economic recovery that enabled substantially reduced allowances.
OCBC’s posted a net profit of S$1.16 billion ($860 million) in the second quarter, according to its latest results, marking a 59 percent surge from S$730 million in the same period last year.
The bank’s quarterly performance was in line with the S$1.14 billion consensus forecast from a Bloomberg survey of five analysts.
OCBC registered S$2.66 billion of net profit in the first half, up 86 percent year-on-year.
Like many other peers in the banking industry, OCBC has benefitted from an economic recovery that has enabled a reduction of reserves linked to bad assets.
It posted S$393 million in total allowances compared to S$1.41 billion last year.
The reduction was driven in no small part by lower allowances for impaired assets (from S$793 million to S$283 million) driven last year largely by exposures to «a number of corporate customers in the oil trading and offshore support vessels sectors».
In addition to reduced allowances, the bank also benefitted from strong wealth management income which grew 25 percent in the first half to S$2.14 billion which represents 39 perfect of OCBC Group’s total income.
OCBC’s private banking arm, Bank of Singapore, saw assets under management grow 11 percent to S$169 billion, driven by continued net new money inflows and positive market valuations.
OCBC also declared a dividend of 25 Singapore cents per share compared to 15.9 Singapore cents a year ago.
At a ratio of 42 percent, this marks the first dividend payout since the Monetary Authority of Singapore lifted its cap on locally incorporated banks and financial firms in the city-state, originally set at 50 percent of 2019’s dividends per share.
While the long-term trajectory of global economic recovery is positive, we remain watchful on the current operating environment in view of the recent virus resurgence and heightened safety measures in our key markets,» said OCBC group chief executive Helen Wong. We stay firmly committed to supporting our customers during this difficult period.