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Oversea-Chinese Banking Corp, Singapore’s No.2 lender, said it was cautiously optimistic on prospects after posting its best profit in six quarters, helped by stronger trading profit and gains from its insurance unit.
OCBC (OCBC.SI), which completed a US$1.4 billion ($1.97 billion) deal last month to buy the Asian private banking unit of Dutch financial services company ING (ING.AS), is banking on a recovery in Asia's wealth management activity to boost earnings in 2010.
“While we remain watchful of developments in Europe, the U.S. and China, we are cautiously optimistic for a gradual recovery in Asia’s economy and in our key markets,” CEO David Conner said in a statement.
Oversea-Chinese Banking Corp (OCBC) clocked a fourth quarter net profit of $502 million, up 67% from $301 million a year ago. It was its best result since the second quarter of 2007 if one-time gains are excluded.
The earnings were in line with the $504 million average forecast of six analysts compiled by Reuters.
OCBC said its net interest income for October-December quarter fell 12% from a year ago to $687 million as interest rates remained low. Its net interest income margin was 2.08%, down from 2.47% a year ago and 2.16% in the third quarter.
The bank, however, saw a 92% rise in non-interest income to $497 million due to higher profits from insurance arm Great Eastern (GELA.SI) and an increase in net trading income.
OCBC booked $77 million in allowances for bad loans and impairments during the fourth quarter, down from $243 million a year ago but up from $52 million in the third quarter.
Earlier this month, DBS Group (DBSM.SI), Southeast Asia's biggest bank, posted a forecast-beating 67% rise in quarterly profit, as strong fee income and a tax writeback helped offset an about 40% jump in bad-debt charges.
Singapore banks are forecast to see better earnings in 2010 because of strong economic recovery in Asia, strong capital markets and a likely decline in bad loans.
Singapore bank shares have weakened this year after a sharp rally last year when financials globally recovered from the market meltdown in 2008.
OCBC shares have fallen about 7% this year after surging 82% in 2009. Singapore shares (.FTSTI) are down about 4.5% so far this year.
