Oversea-Chinese Banking Corporation (OCBC) reported a group net profit of $1.5 billion for the 1QFY2021 ended March, 33% higher q-o-q from $1.13 billion previously, and 115% higher y-o-y from $698 million previously.

In its quarterly results updated dated May 7, OCBC attributes the better performance to broad-based income growth and lower allowance.

Total income for the period grew 17% q-o-q to $2.91 billion, primarily driven by non-interest income, which jumped 40% q-o-q or $424 million to $1.47 billion. This follows higher net commissions and fees (+13% or $68 million), higher trading income (+20% or $52 million) and higher profit from life insurance (+192% or $422 million) on better market conditions.

Net interest income remained stable for the quarter at $1.44 billion, with net interest margin (NIM) maintained at 1.56%.

On a y-o-y basis, total income also grew 17% on the back of non-interest income which jumped 70% y-o-y from $864 million previously, though net interest income was 11% lower in the 1QFY2021, mainly attributable to a 20 basis points compression in net interest margin in the sustained low interest rate environment.

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Operating expenses were 2% higher q-o-q at $1.15 billion while the cost-to-income ratio improved to 39.4% from 45.3% in the 4QFY2020. However, it was 4% higher y-o-y, driven by a rise in staff costs associated with increased business activities.

The group’s share of results of associates in the 1QFY2021 rose 59% to $209 million, driven by higher contribution by Bank of Ningbo.

Lower net allowances of $161 million were set aside in the period, compared to $285 million in the previous quarter and $657 million the previous yea.

Following the higher net profit, OCBC’s annualised ROE grew 3.1 percentage points to 12.4% from 9.3% a quarter ago, while annualised earnings per share increased 36% to S$1.35 from S$0.99 in the preceding quarter.

Total non-performing assets (NPAs) stood at $4 billion as at March 31, relatively flat compared to the previous quarter and lower than the $4.39 billion a year ago.

The non-performing loans (NPL) ratio also remained stable at 1.5% since the previous quarter, while NPA coverage grew three percentage points q-o-q and 28 percentage points y-o-y to 118%.

Customer loans grew 1% q-o-q to $271 billion as at March 31, mainly attributable to lending in Great China and network customers in the UK.

Customer deposits stood at $316 billion as at March 31, and comprised 79% of OCBC’s funding bacse, of which current account and savings deposits (CASA) increased 3% q-o-q to $195 billion. To that end, the CASA ratio rose to 61.8% from 60.3% previously.

The loans-to-deposits ratio was 84.7%, slightly above 83.7% in the previous quarter. OCBC’s Common Equity Tier-1 (CET1) was 15.5%, a slight increase from 15.2% the previous quarter.

OCBC CEO Helen Wong says that the bank’s “robust set of results” for the 1QFY2021 was underscored by the strength and resilience of its franchise. “Earnings were up in our core markets and the momentum across our businesses is building up from renewed market optimism,” she says.

“While we remain watchful of the prevailing risks in the operating environment, our strong balance sheet and capital position will enable us to capitalise on opportunities arising from  improved economic conditions, particularly in ASEAN and Greater China,” she adds.

Shares in OCBC close 20 cents or 1.64% higher at $12.40 on May 7.