OCBC's full-year net profit up 12% at S$1.96b

By Desmond Wong, Channel NewsAsia         Posted: 19 February 2010 2205 hrs

SINGAPORE : Singapore's OCBC Bank on Friday said its full-year net profit rose 12 per cent on-year to S$1.96 billion.

Growth was driven by an improving climate for insurance, as well as tight risk and cost management.

But OCBC said it is cautious about this year's outlook.

As the economy recovered over 2009, so too did the fortunes of OCBC.

The lender's fourth-quarter results beat estimates - rising 67 per cent to S$502 million.

It was lifted by higher non-interest income and lower allowances.

OCBC said the results were strong but also advised caution where net interest income margins were concerned.

David Conner, chief executive officer, OCBC, said: "My sense is that if we do a good job for the next six months or so, depending on how interest rates start to move, we will see the margin move sideways or a little softer, but not any dramatic drops."

The bank's non-interest income rose 37 per cent in 2009 to almost S$2 billion due to a rise in fees and commission income, and trading and investment gains.

Net interest income, however, inched up only 2 per cent on-year to S$2.8 billion as interest rates remained low.

OCBC booked S$77 million in allowances for loans and impairments, about 68 per cent lower than a year earlier.

Its non-performing loan ratio was 1.7 per cent, up from 1.5 per cent in the year-ago period.

But while loans growth was slow in 2009, OCBC expects a pick-up in 2010, in both the consumer and corporate lending segments, as economic activity picks up.

Samuel Tsien, head, Global Corporate Bank, OCBC, said: "We do expect that the growth in our home market of Singapore to probably be in the mid single-digit level for the corporate loan book. For Malaysia, we continue to see higher single-digit growth, but in the double-digit range, it will probably be in China and Indonesia."

Lending growth for 2009 stood at 1 per cent on-year, primarily led by housing loans.

OCBC has proposed a dividend of 14 cents per share for the fourth quarter, bringing the full-year 2009 dividend to 28 cents per share.