OCBC : O39 0% reported a net profit of S$1.7 billion for the second quarter ended June, up 34 per cent from S$1.3 billion last year.

The results represented a slight miss from the S$1.8 billion mean estimate from four analysts polled by Refinitiv. Total income rose 30 per cent year on year to S$3.5 billion from S$2.7 billion, with net interest income for the quarter up 40 per cent on the year to S$2.4 billion as opposed to S$1.7 billion previously.

The bank said this was underpinned by asset growth and higher net interest margin, which registered a 55 basis point increase to 2.26 per cent on the back of higher market interest rates.

Non-interest income grew 11 per cent to S$1.1 billion, mainly from net gains from the sale of investment securities and higher profit from insurance, partly offset by lower fee and trading income.

The bank’s non-performing loans ratio stood at 1.1 per cent, down from 1.3 per cent the previous year.

Annualised earnings per share stood at S$1.51 for the quarter, up from S$1.13 a year earlier.

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Total allowances stood at S$252 million, widening from S$72 million the previous year as a result of higher allowances for non-impaired assets.

Operating expenses grew 2 per cent on the year to S$1.3 billion, led by an increase in staff costs. The group’s cost-to-income ratio was lower at 38.5 per cent, 10.5 percentage points down from 49 per cent in Q2 FY2022.

Credit costs for the quarter stood at 31 basis points, up from eight basis points in the previous year, and 12 basis points in the previous quarter.

Annualised return on equity was up 3.2 percentage points to 13.5 per cent for the quarter, from 10.3 per cent the prior year.

For the first half of the year, net profit for the bank rose 38 per cent year on year to S$3.6 billion, on the back of strong contributions from the banking, wealth management and insurance franchise.

This also represents the first time OCBC’s net profit crossed the S$3 billion mark for the half-year period, said group chief executive Helen Wong.

The lender has declared a higher interim dividend of S$0.40 per share for the period, up 43 per cent from S$0.28, to represent a payout ratio of 50 per cent of the group’s H1 net profit.

The interim dividend will be paid out on Aug 25, and is expected to reduce OCBC’s Common Equity Tier 1 capital adequacy ratio by 0.8 percentage point.

As at end-June, customer loans were up 2 per cent on a constant currency basis to S$297 billion from S$298 billion in the previous corresponding period, driven mainly by growth in corporate and housing loans.

The loans-to-deposits ratio stood at 78.8 per cent, compared with 84.4 per cent a year earlier, and 79.2 per cent in the last quarter.

Shares of OCBC ended Thursday (Aug 3) down S$0.15 or 1.1 per cent at S$13.04.