By Joyce Koh
May 5 (Bloomberg) -- Oversea-Chinese Banking Corp., the lender that owns Singapore’s biggest life insurer, said first- quarter profit rose 24 percent, driven by growth in non-interest income and lower bad-loan costs.
Net income climbed to S$676 million ($487.7 million) from S$545 million a year earlier, the Singapore-based bank said in a statement to the stock exchange today. Profit beat the S$514.9 million average estimate of seven analysts surveyed by Bloomberg.
Oversea-Chinese and local rivals DBS Group Holdings Ltd. and United Overseas Bank Ltd. are benefiting as Singapore’s $182 billion economy is estimated to expand as much as 9 percent. Fitch Ratings said last month that Oversea-Chinese and its competitors may bolster earnings and balance sheets as the Singapore economy continues to recover.
“While slow growth prospects for the European and U.S. economies warrant caution, Asia’s economic recovery continues to build momentum, signaling a positive outlook for the rest of the year,” Chief Executive Officer David Conner said in the statement.
The stock lost 1.5 percent to S$8.46 at the midday trading break in Singapore today, before the earnings were announced. The shares have slipped 7 percent this year, while the benchmark Straits Times Index has fallen 1.4 percent.
Oversea-Chinese in October agreed to buy ING Groep NV’s private-banking assets in Asia for $1.46 billion to tap the growing number of wealthy people in the region. It said the deal will more than triple its private-banking assets, to $23 billion.
Non-interest income, which includes fees and commissions, insurance, trading and investment income, rose 12 percent to S$681 million from S$607 million a year earlier, the bank said. Allowances for loans and other assets plunged to S$25 million from S$197 million a year earlier.
Net interest income, or the difference between what the bank makes from lending and what it pays on deposits, fell 5 percent to S$704 million in the quarter. The net interest margin, a measure of loan profitability, narrowed to 2.03 percent from 2.42 percent a year earlier.
--Editors: Joost Akkermans, Philip Lagerkranser
