Oversea-Chinese Banking Corp, one of Singapore's major lenders, has reported a fourth quarterly profit increase as it absorbed loans from its Wing Hang Bank Ltd acquisition and booked a gain from a stake in a Chinese bank.
Net income climbed 62 percent to S$1.23 billion ($962 million) for the three months ended Sept 30 from S$759 million a year earlier, the bank said in an exchange statement on Thursday.
Profit excluding gains from the stake in Bank of Ningbo Co was S$841 million, against the average of four analysts' estimates compiled by Bloomberg of S$839 million.
Chief Executive Officer Samuel Tsien is seeking growth in overseas markets from China to Indonesia, and in fee businesses such as wealth management as the bank grapples at home with the lowest loan profitability in Southeast Asia. OCBC completed its $5 billion purchase of Wing Hang in Hong Kong earlier this year.
"Even after stripping out profits from Wing Hang and the one-off gains these are a strong set of numbers," said Paul Dowling, principal analyst at Sydney-based bank research firm East & Partners Pty. "All the core boxes have been ticked."
OCBC's net interest income - the difference between what it makes on deposits and pays on loans - rose 27 percent to S$1.25 billion, the bank said. Loans advanced 27 percent from a year ago to S$205 billion, with its OCBC Wing Hang Bank unit contributing 58 percent of the increase.
Excluding Wing Hang's contributions, OCBC's loans grew 11 percent in the quarter.
Monthly loan growth in Singapore this year through August slowed to an average 13.2 percent from a year earlier, from 2013's 17.7 percent, as house and business sector lending slowed, data from the Monetary Authority of Singapore showed.
OCBC's net interest margin, a measure of lending profitability, widened for the third straight quarter to 1.68 percent from 1.63 percent a year earlier.
Singapore's banks have been seeking growth outside their home city, where lenders had an average 12-month net interest margin of 1.77 percent, the lowest in Southeast Asia, according to filings compiled by Bloomberg before Thursday.
Indonesia had the highest average at 5.46 percent, the data show.
Operating expenses rose 28 percent to S$870 million, reflecting costs tied to the consolidation of Wing Hang, the bank said. The growth in that measure needs to be pulled back, Dowling from East & Partners said.
OCBC's non-interest income excluding one-time gains rose 3 percent to S$801 million in the third quarter as net trading income and fees and commissions from wealth management, loans and trade increased.
Great Eastern Holdings Ltd, the bank's insurance unit, reported a 31 percent drop in net income to S$194.6 million earlier in the week.
OCBC increased its stake in Bank of Ningbo to 20 percent in the third quarter, allowing it to record the Chinese lender as a unit on its balance sheet.
The Singaporean bank's initial 15.3 percent stake in Bank of Ningbo, which was considered an investment, was deemed sold for S$391 million and was booked as a one-time gain in its Thursday results.
Provisions OCBC set aside for sour debt in the third quarter increased to S$97 million from S$94 million a year earlier. Its non-performing loan ratio improved to 0.7 percent from 0.8 percent a year earlier.
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