Oversea-Chinese Banking Corp Limited (SGX: O39) is one of the three main local banks in Singapore. Since the release of its 2018 second quarter earnings update on 6 August 2018, OCBC’s stock price has been flat. But, I actually see five positive things in the bank’s latest set of results:
1. Net interest income grew 8% year-on-year to S$1.45 billion, driven by loan growth and an improvement in the bank’s net interest margin. Moreover, OCBC’s loan growth was broad-based across industries as well as geographical segments.
2. Non-interest income stepped up by 2% year-on-year to S$1.02 billion because of a 19% rise in wealth management fee income, and higher brokerage, fund management, loan related activities, and investment banking income.
3. OCBC’s cost-to-income ratio fell from 44.2% a year ago to 41.9% as a result of total income growing while expenses remained flat. With the cost-to-income ratio (also known as the efficiency ratio), the lower it is, the better.
4. The bank’s return on equity (ROE) improved from an annualized 11.4% in 2017’s second quarter to 12.6% in the reporting period.
5. OCBC reported an extremely sound capital position. As of 30 June 2018, its Common Equity Tier 1 Capital Adequacy Ratio (CAR), Tier 1 CAR, and Total CAR were 13.2%, 14.3%, and 15.9% respectively. These ratios were well above the respective minimum regulatory requirements of 6.5%, 8%, and 10%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.