© Reuters. People go through an OCBC bank branch in Singapore on November 4, 2020. REUTERS / Edgar Su / Files
By Anshuman Daga
SINGAPORE (Reuters) – Lenders Singapore Oversea-Chinese Banking Corp. and United Overseas Bank (OTC 🙂 on Wednesday surpassed earnings estimates, driven by the recovery in their core markets and reduced provisions for loan losses.
The outlook for Singapore’s banking sector has improved as a booming economy has boosted demand for mortgages and loans, while booming markets have bolstered the wealth management business.
At the same time, benign credit costs indicate that banks have been able to manage asset quality in the face of the pandemic affecting companies.
OCBC, Singapore’s second-largest bank, reported a net profit of $ 1.16 billion ($ 858.75 million) in April-June compared to $ 730 million a year earlier. This compares with the average of four thousand estimates of 1.12 billion Australian dollars, according to data from Refinitiv. But profit fell 23% from the first quarter.
“While the long-term trajectory of the global economic recovery is positive, we remain alert to the current operating environment in view of the recent resurgence of the virus and the highest security measures in our key markets,” said Helen Wong , executive chairwoman in April, said in a statement.
The bank’s provisions for credit losses fell by 69% in the second quarter compared to the previous year.
The quarterly net profit of the smallest countries, United Overseas Bank, reached A $ 1 billion, exceeding the average of US $ 948 million by three analyst estimates, according to Refinitiv data. Profits increased 43% year-over-year as impairment charges were halved, but profit was flat from the first quarter.
Both banks increased dividend payments. Last week, the Singapore Central Bank removed the dividend limits paid by banks, citing an improvement in the global economic outlook.
Southeast Asia’s largest bank, DBS Group (OTC 🙂 Holdings, reports results Thursday.
Low interest rates have reduced banks’ net interest margins (a key indicator of profitability), but this has been offset by an increase in commission income, including wealth management fees.
(1 $ = 1,3508 Singapore dollars)
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