Oversea-Chinese Banking Corporation Limited reported its financial results for the first half of 2022 with group net profit for 1H22 rising 7% from a year ago to S$2.84 billion while net profit for Q2 was S$1.48 billion, up 28% compared to a year ago and 9% from the previous quarter.
H22 Year-on-Year Performance
Group net profit of S$2.84 billion increased 7% from a year ago, largely driven by higher net interest income and lower allowances. Net interest income of S$3.20 billion was 10% above the previous year, mainly attributable to a 6% increase in average asset balances and a 6 basis points rise in net interest margin (“NIM”) to 1.63%. Non-interest income of S$2.32 billion was 10% lower against last year, largely due to a drop in fee, investment, and trading income.
The Group’s annualised ROE was 11.0% for 1H22, higher than the 10.8% in 1H21, while annualised earnings per share increased to S$1.26 from S$1.19 a year ago.
2Q22 Year-on-Year Performance
Group net profit rose 28% to S$1.48 billion, underpinned by robust performance across the Group’s banking, wealth management and insurance businesses.
Net interest income grew 16% to a new high of S$1.70 billion. This was largely driven by asset growth and margin expansion. NIM rose 13 basis points to 1.71%, as asset yields outpaced higher funding costs amid a rapidly rising interest rate environment.
Net trading income of S$267 million was up 26%, from higher customer and non-customer flow treasury income. Net realised losses from the sale of investment securities and others were S$51 million, as compared to a net gain of S$35 million in the previous year, mainly due to sale of fixed income securities.
Profit from life insurance from subsidiary Great Eastern Holdings (“GEH”) was S$372 million, higher as compared to S$205 million a year ago. This was attributable to an increase in operating profit and mark-to-market gains in its insurance funds from rising interest rates. Total weighted new sales grew 3% to S$551 million, while new business embedded value (“NBEV”) increased 5%to S$202 million, with the NBEV margin at 36.7%.
2Q22 Quarter-on-Quarter Performance
Group net profit of S$1.48 billion increased 9% from S$1.36 billion a quarter ago. Net interest income increased 13% to S$1.70 billion, mainly from a 16 basis points expansion in NIM. Non-interest income grew 3% to S$1.18 billion, as higher trading income and profit from life insurance offset a decline in fee and investment income.
NPL ratio of 1.3% was lower from a year ago and the previous quarter and the allowance coverage against total NPAs was 99% as at 30 June 2022.
