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SINGAPORE: Singapore’s second largest bank Oversea-Chinese Banking Corp (OCBC) raised its targeted 2023 net interest margin, a key profitability gauge, after posting on Friday a better-than-expected 21% jump in third-quarter net profit.
OCBC, which is also Southeast Asia’s second-largest lender by assets, projected a net interest margin at 2.25% region for 2023, according to earnings presentation slides by Group Chief Executive Helen Wong.
That is higher than the 2.2% net interest margin expected by OCBC earlier for 2023. Net interest margin was 2.28% in the first nine months of this year.
The bank sees 2023 return on equity above 14% but loan growth in the low single-digit range, reflecting market conditions, versus earlier projections of low-to-mid single-digit loan growth.
“Looking ahead, macroeconomic conditions are expected to be clouded by growing uncertainties from inflationary risks, tightening monetary policies and heightened geopolitical risks,” Wong said in a statement.
OCBC, which counts Singapore, greater China and Malaysia among its key markets, said its July-September net profit rose to S$1.81 billion ($1.33 billion) from S$1.49 billion a year earlier, underpinned by higher net interest income.
This beat the mean estimate of S$1.80 billion from four analysts polled by LSEG.
The quarterly results from OCBC rounded up a relatively positive third quarter earnings season by Singapore banks despite global macroeconomic challenges.
Larger peer DBS Group reported on Monday a stronger than expected third-quarter net profit on the back of higher interest rates, which it forecast will also help keep its profit steady next year.
United Overseas Bank also expected a stronger 2024 outlook despite posting a slightly weaker-than-expected third quarter earnings.
Singapore banks have benefited from higher global interest rates and strong inflows of wealth drawn in by the city-state’s political stability.
But global economic uncertainty could weigh on Singapore’s economic prospects. The country’s central bank kept monetary policy settings unchanged in April and October. – Reuters
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