Oversea-Chinese Banking Corporation Limited (OCBC) has reported a record net profit of S$3.93 billion for the first half of 2024, marking a 9% increase compared to the same period last year. This impressive performance is attributed to broad-based income growth, higher net interest income, and a significant rise in non-interest income. The bank’s strong financial results reflect its robust business strategy and effective cost management, positioning it for continued success in the competitive banking sector.
OCBC’s strong financial performance in the first half of 2024 was driven by broad-based income growth, which surpassed S$7 billion for the first time. Net interest income rose by 3% to a new high of S$4.87 billion, supported by an increase in high-quality assets. Despite a moderation in net interest margin to 2.23%, the bank’s average assets grew by 5%, contributing to the overall income growth.
Non-interest income also saw a significant increase, rising by 15% to S$2.39 billion. This growth was fueled by a 19% increase in wealth management fees, driven by strong momentum across all wealth channels. Net trading income surged by 28% to S$726 million, while insurance income rose by 17% to S$583 million. The bank’s wealth management income reached a record S$2.54 billion, accounting for 35% of the total income.
The diverse sources of income highlight OCBC’s ability to leverage its various business segments to drive growth. The bank’s focus on wealth management, insurance, and trading has enabled it to capitalize on market opportunities and deliver strong financial results.
Effective Cost Management
OCBC’s effective cost management played a crucial role in its strong financial performance. Operating expenses were well controlled, with a cost-to-income ratio improving to 37.5%. The bank’s allowances were 14% lower at S$313 million, reflecting its prudent risk management practices and sound asset quality.
The bank’s customer loans grew by 3% in constant currency terms, while the non-performing loan (NPL) ratio trended lower to 0.9%. This indicates that OCBC has maintained a healthy loan portfolio, with a focus on high-quality assets. The bank’s capital, funding, and liquidity positions remained robust, further supporting its financial stability.
OCBC’s commitment to cost management and risk mitigation has enabled it to achieve a return on equity of 14.5% and an earnings per share of S$1.74. These metrics underscore the bank’s ability to generate strong returns for its shareholders while maintaining financial discipline.
Positive Outlook and Dividend Increase
Looking ahead, OCBC’s positive financial performance and strategic initiatives position it for continued growth. The bank’s focus on broad-based income growth, effective cost management, and prudent risk practices will support its long-term success. The interim dividend has been raised by 10% to 44 cents per share, reflecting the bank’s confidence in its financial outlook and commitment to delivering value to shareholders.
The bank’s wealth management assets under management (AUM) reached a new high of S$279 billion, up from S$274 billion in the previous year. This growth in AUM highlights the bank’s ability to attract and retain clients, further strengthening its position in the wealth management sector.
In conclusion, OCBC’s record net profit of S$3.93 billion for the first half of 2024 is a testament to its robust business strategy, effective cost management, and strong financial performance. The bank’s focus on broad-based income growth and prudent risk practices positions it for continued success in the competitive banking sector.
