Stronger fees pushed OCBC's record profit of $899m in 1Q

That's an impressive 29% jump.

Oversea-Chinese Banking Corporation Limited reported a record profit of of S$899 million for the first quarter of 2014, an increase of 29% from S$696 million a year ago.

CIMB noted that growth in net interest income was more subdued (+5% qoq), with Greater China’s loans and loans to private individuals contributing the bulk of the 3% loan growth qoq. Cost growth was controlled, with cost-income ratio falling to 37.4% (-4.3% pts qoq).

Here's more:

Noticeable NIM expansion

NIM expanded 6bp qoq to 1.70%, the first noticeable improvement in four quarters. This was made possible by: 1) improved loan spreads; 2) higher income from money-market activities; and 3) gapping opportunities. Average yield on interest-earning assets rose 6bp qoq to 2.66% while average cost of liabilities was flat at 1.02%. We continue to expect favourable NIM trends with rising lending yields.

Asset quality remained sound

NPLs fell 3.9% qoq, while its NPL ratio was flat at 0.7%. Provisioning came in below expectations (S$41m, -40% qoq) on lower portfolio allowances. Despite its lower credit costs, the bank’s allowance coverage ratio improved 11bp to 145%. Asset quality remained benign, with NPL ratios either staying stable or improving in all geographies, including Greater China.

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