OCBC must be thankful for these segments for its robust gains

It just shrugged off the slower loans.

According to DBS, insurance contribution rebounded thanks to improved non-par fund profits from better market conditions.

Here's more from DBS:

Wealth management revenue jumped 43% q-o-q, 75% y-o-y and comprises 27% of total revenues. Key deviation arose from higher-than-expected trading income; other P/L lines were largely in line.

NIM slipped but less than peers, slower loans as expected. Asset yields were under pressure but deposit costs fell contrary to peers, resulting in only a 2bps decline in NIM. NIM in Malaysia and Indonesia improved but the flow through to the group NIM was minimal. Loan growth moderated q-o-q; 9M12 YTD growth at 3.4%.

Deposits fell. Fixed deposits and ‘other deposits’ declined q-o-q because of the bank decided to reduce expensive wholesale deposits as alternative funding sources from commercial papers and certificates of deposits are available.

Robust asset quality. Higher specific provisions arose from the Singapore portfolio while general provisions rose by just S$2m, in line with the soft loan momentum. NPL ratios are still the lowest vs peers while absolute NPLs were stable.

Capital strengthened from higher earnings, retention of realised gains from divestment of FNN and APB shares, issuance of S$1bn preference shares as well as issuance of subordinated notes in Singapore (US$1bn/S$1.22bn) and Malaysia (RM600m/S$240m).

Strong set of results. 3Q12 core net profit was driven by higher non-interest income, particularly from insurance and trading income.

Excluding the one-off divestment gains, pre-provision profits stood out as the strongest among peers at 27% q-o-q. Provisions remained low although on an uptrend, but that was expected.

Outlook remains uncertain. NIM would likely remain under pressure but quantum should be small. Management is guiding for mid-to-high single digit loan growth.

Meanwhile, resources would be channeled more towards Malaysia and Indonesia where returns are relatively more attractive.

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