OCBC hits record 23% profit surge

Thanks to robust trading and insurance revenue from Great Eastern Holdings.

In a release, Oversea-Chinese Banking Corporation Limited achieved record net profit of S$1,480 million for the first half of 2012 , an increase of 23% from S$1,205 million a year ago. The record results were driven by robust net interest income growth, higher fee, trading and investment income, and healthy insurance revenue from Great Eastern Holdings.

Here's more from OCBC:

First half net interest income increased 17% to S$1,882 million on strong asset growth. Non-interest income was 16% higher at $1,442 million, as net trading income grew strongly to S$235 million and life assurance profits rose 14% to S$292 million. Fees and commissions reflected healthy contributions from wealth management and loan-related activities, growing by 3% from a year ago to S$591 million.

Operating expenses of S$1,286 million were 7% higher than the previous year, while allowances for loans and other assets increased by 27% to S$134 million (on loans of S$138 billion), comprising portfolio allowances of S$74 million and specific allowances of S$56 million.

Core net profit for 1H12, which excluded the S$42 million gain from the divestment of non-core assets in the first quarter of 2012 (“1Q12”), was S$1,438 million, up 23% year-on-year. Annualised return on equity, based on core earnings, was 13.1% in 1H12, compared with 11.8% in 1H11, while annualised core earnings per share rose 20% year-on-year to 81.5 cents from 68.1 cents a year ago.

The Group’s 1H12 revenue from various wealth management activities, comprising revenue from insurance, private banking, asset management, stockbroking and sales of other wealth management products, grew to S$860 million, up 18% from a year ago. As a share of total revenue, wealth management contributed 26%, unchanged year-on-year. OCBC’s private banking business continued to expand, with assets under management growing 20% year-on-year to US$36 billion (S$45 billion) as at 30 June 2012.

The Group recorded a net profit of S$648 million for the second quarter of 2012 (“2Q12”), an increase of 12% from S$577 million a year ago (“2Q11”). Earnings growth was underpinned by higher net interest income, fees and commissions, trading revenues and lower allowances, but the growth was partly offset by lower profit from life insurance, as GEH’s investment performance was impacted by less favourable market conditions.