OCBC shares fall on Q1 profit growth concern

SINGAPORE: Oversea-Chinese Banking Corp (OCBC) shares fell the most in a month after the Singaporean bank posted firstquarter profit growth that relied largely on a drop in loan provisions as lending margins stagnated.

Southeast Asia’s secondlargest bank slid as much as 3.2 per cent in Singapore yesterday morning after chief executive officer Samuel Tsien signalled that last quarter’s decline in loan allowances may be as good as it gets this year. Analysts expressed concern that OCBC’s loan margins failed to widen from the previous quarter — unlike those at DBS Group Holdings Ltd and United Overseas Bank Ltd — even as benchmark interest rates rose.

“Investors probably expected a stronger performance” in net interest margins, said Bloomberg Intelligence analyst Diksha Gera.

OCBC was the last of Singapore’s three major banks to report results.

Its net income increased 29 per cent from a year earlier to S$1.11 billion (RM3.28 billion) in the three months ended March.

The bad-loan ratio improved from the previous quarter and the bank’s loan portfolio is “sound”, said Tsien. Still, he said later at a news briefing that loan provisions might increase in subsequent quarters.

Net interest income climbed 11 per cent from a year earlier, reflecting gains in the local interest-rate benchmark.The threemonth interbank offered rate is near a 10-year high reached earlier this year.