Singapore’s bank OCBC raises 2023 target, third-quarter net profit beats forecast

By Yantoultra Ngui

SINGAPORE (Reuters) -Singapore’s second largest bank Oversea-Chinese Banking Corp (OCBC) raised its targeted 2023 net interest margin, a key profitability gauge, after posting on Friday a better-than-expected 21% jump in third-quarter net profit.

OCBC, which is also Southeast Asia’s second-largest lender by assets, projected a net interest margin at 2.25% region for 2023, according to earnings presentation slides by Group Chief Executive Helen Wong.

That is higher than the 2.2% net interest margin expected by OCBC earlier for 2023. Net interest margin was 2.28% in the first nine months of this year.

The bank sees 2023 return on equity above 14% but loan growth in the low single-digit range, reflecting market conditions, versus earlier projections of low-to-mid single-digit loan growth.

“Looking ahead, macroeconomic conditions are expected to be clouded by growing uncertainties from inflationary risks, tightening monetary policies and heightened geopolitical risks,” Wong said in a statement.

OCBC, which counts Singapore, greater China and Malaysia among its key markets, said its July-September net profit rose to S$1.81 billion ($1.33 billion) from S$1.49 billion a year earlier, underpinned by higher net interest income.

This beat the mean estimate of S$1.80 billion from four analysts polled by LSEG.

The quarterly results from OCBC rounded up a relatively positive third quarter earnings season by Singapore banks despite global macroeconomic challenges.

Larger peer DBS Group reported on Monday a stronger than expected third-quarter net profit on the back of higher interest rates, which it forecast will also help keep its profit steady next year.

United Overseas Bank also expected stronger 2024 outlook despite posting a slightly weaker-than-expected third quarter earnings.

Singapore banks have benefited from higher global interest rates and strong inflows of wealth drawn in by the city-state’s political stability.

But global economic uncertainty could weigh on Singapore’s economic prospects. The country’s central bank kept monetary policy settings unchanged in April and October.

($1 = 1.3604 Singapore dollars)

(Reporting by Yantoultra Ngui; Editing by Tom Hogue and Lincoln Feast)