SINGAPORE, Oct 26 — Oversea-Chinese Banking Corp, Southeast Asia’s second-largest lender, reported higher third-quarter profit on increased revenue from its lending, wealth management and life-insurance businesses.

Net income rose 12 per cent to S$1.06 billion (RM3.3 million) in the three months ended September 30, the Singaporean bank said in a filing this morning. That compares with the S$1.01 billion average forecast in a Bloomberg survey of seven analysts.

Rising income from wealth management and healthier lending margins have allowed OCBC to cushion the effect of continued problems in the regional offshore oil and gas services sector, where several local companies have defaulted on their debt. OCBC is the first of Singapore’s three large banks to report third-quarter results.

“Our key markets of Singapore, Malaysia, Indonesia and Greater China have all contributed to our broad-based income growth,” Chief Executive Officer Samuel Tsien said in the filing.

“However, we will remain watchful of ongoing geopolitical risks and the continuing stress observed in the oil and gas industry.”

OCBC’s results were helped by a 12 per cent increase in net interest income to S$1.38 billion, as lending grew and its net interest margin rose by four basis points.
Insurance Boon

Net income at Great Eastern Holdings Ltd rose 21 per cent to S$235.5 million in the quarter, driven by higher gross written premiums, the OCBC insurance unit said earlier this week.

OCBC completed its $227.5 million purchase of Barclays Plc’s wealth-management units in Singapore and Hong Kong last year, bolstering the assets at its private-banking unit, Bank of Singapore. Wealth management fee income rose 32 per cent in the quarter, partly because of the acquisition, the bank said.

Recent problems in the energy services sector have been exacerbated by falling collateral values for oil vessels, forcing the banks to add to their bad-loan buffers, according to Bloomberg Industry analyst Diksha Gera. Excess capacity from idled ships triggered the decline in valuations, Gera said in a report last month.

OCBC’s nonperforming assets rose 15 per cent to S$2.98 billion in the quarter from a year earlier, because of the downgrade of corporate accounts in the oil and gas support services sector, which remained under stress, the bank said.

Stock rally

Shares of OCBC have rallied 29 per cent this year, the most among the three major Singapore banks and more than the 19 per cent increase in the Bloomberg Asia Pacific Banks Index.

Key figures reported by OCBC:

Allowances for loans and asset impairments fell to S$156 million from S$166 million a year earlier Net interest income grew 12 per cent to S$1.38 billion Net interest margin was 1.66 per cent versus 1.62 per cent a year ago.

Net trading income dropped 27 per cent to S$118 million Nonperforming loan ratio was 1.3 per cent versus 1.2 per cent a year ago.

United Overseas Bank Ltd is scheduled to report quarterly earnings on November 3, and DBS Group Holdings Ltd will post its results on November 6. — Bloomberg