SINGAPORE (REUTERS) – Oversea-Chinese Banking Corp (OCBC), Singapore’s second-biggest listed bank, reported its worst quarterly profit this year after booking a one-off charge at its Indonesian banking unit.

OCBC’s net profit for the third quarter ended Sept 30 came in at $1.17 billion for the July-September quarter, missing a $1.19 billion average estimate of five analysts, according to data from Refinitiv. This was 6 per cent lower than the net profit of $1.25 billion it reported in the year-ago quarter.

However, excluding the $91 million one-off charge related to changes in its expected credit loss modelling at the Indonesian unit Bank OCBC NISP, core net profit was $1.26 billion, slightly higher than $1.25 billion a year earlier.

Higher wealth management fees helped offset a challenging environment as Singapore narrowly dodged a recession in the third quarter due to the unrelenting trade war between the United States and China – two of its biggest export markets.

Singapore’s central bank eased monetary policy for the first time in three years last month.

As loan growth moderates and interest rates soften, banks are gearing up for a challenging outlook after clocking robust growth rates in recent years.

The lender’s net interest income grew 6 per cent to $1.60 billion and net interest margin rose 5 basis points to 1.77 per cent.

Commenting on the group’s performance and outlook, CEO Samuel Tsien said: “Our performance for this quarter underscored the competitive strength of our diversified business franchise. Balanced growth across our banking, wealth management and insurance businesses allowed us to deliver a quarter-on-quarter and year-on-year increase in core earnings amid a challenging operating environment.

“Loans rose year-on-year and fee income climbed to a record high led by wealth management as the private banking business continued to attract net new money inflows. Great Eastern reported increased operating earnings and new sales as well as higher business embedded value and margin.

He added that: “OCBC’s underlying business is resilient and our strong capital, funding and liquidity position will allow us to deliver robust and sustainable results to our shareholders and all stakeholders.”

With additional information from The Straits Times

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