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Oversea-Chinese Banking Corp Limited’s Latest Earnings Update: Record Net Profit

Oversea-Chinese Banking Corp Limited (SGX: O39), or OCBC, is one of the three main local banks listed in Singapore. This morning, the bank released its 2018 third-quarter earnings update. Here are 10 quick things to know from the latest results:

1. Net interest income improved by 9% year-on-year, up from S$1.38 billion to S$1.51 billion. Total income increased by 5.0% from S$2.4 billion to S$2.5 billion, mainly due to higher net interest income.

2. Operating profit was up by 4% year-on-year to S$1.48 billion. Operating income grew at a slower pace (as compared to total income) mainly due to higher operating expenses.

3. Net profit was up by 12.0% year-on-year to a record S$1.25 billion, driven by higher income and lower allowance.

4. Customer loans and deposits were up by 10.0% and 7.0%, respectively, as compared to last year.

5. OCBC’s net interest margin (NIM) improved from 1.66% to 1.72%. The higher NIM was due to improved margins in Singapore, Malaysia and Greater China, and a higher average loans-to-deposits ratio.

6. OCBC’s cost-to-income ratio grew from 41.4% to 42.0%, mainly due to higher staff costs.

7. The non-performing loans (NPL) ratio was higher by 0.1% at 1.4%.

8. Year-on-year, annualised return on shareholders’ equity improved from 11.9% to 12.6% while book value per share rose from S$8.77 to S$9.37.

9. OCBC’s Common Equity Tier 1 capital adequacy ratio (CAR), Tier 1 CAR and Total CAR as at 30 September 2018, were 13.6%, 14.4% and 16.1% respectively. These ratios were well above the respective regulatory requirement of 6.5%, 8% and 10%.

10. OCBC’s chief executive, Samuel Tsien, commented:

“Our performance underscored the competitive strength and quality of our banking, wealth management and insurance franchise in the region. Record quarterly and year to date net profit were achieved through improved NIM, continued loan growth, higher non-interest income, and continued cost management discipline. …

As we remain alert to developments in the global economy and financial markets, our strong liquidity and capital base will position us well for prudent and sustainable growth.”

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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. Motley Fool has a recommendation for Oversea-Chinese Banking Corp Limited.