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OCBC Profit Falls More Than Expected as Loan Provisions Surge

OCBC Profit Falls More Than Expected as Loan Provisions Surge

(Bloomberg) -- Oversea-Chinese Banking Corp.’s first-quarter profit fell more than analysts anticipated as non-interest income slumped and provisions for loan losses more than doubled amid the coronavirus pandemic.

  • Net income slid 43% from a year earlier to S$698 million ($494 million) in the three months ended March 31, Southeast Asia’s second-largest bank by assets said Friday. That missed the S$967.2 million average estimate of six analysts surveyed by Bloomberg.

Key Insights

  • OCBC, the last of Singapore’s major lenders to report earnings this season, joined its peers in preparing for mounting bad debts as the nation heads for a recession. It was the first time that profit fell at all three banks since 2016.
  • Non-interest income was hit by a profit slump at the bank’s Great Eastern Holdings Ltd. insurance unit after financial-market volatility dented mark-to-market valuations.
  • The extent of the economic fallout from the outbreak is “very uncertain” and a recovery is unlikely until 2021 at the earliest, the bank said.
  • Loan profitability held firm but the bank expects net interest margin compression in coming quarters due to falling interest rates.

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  • For more details on the results, click here.
  • See stories on the earnings of DBS Group Holdings Ltd. and United Overseas Bank Ltd.

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