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OCBC Q1 net profit falls 14% YOY as insurance income drops, allowances jump

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OCBC Q1 net profit falls 14% YOY as insurance income drops, allowances jump

Oversea-Chinese Banking Corp. Ltd. said first-quarternet profit fell 14% year over year, dragged down by a fall in insurance incomeand a jump in allowances.

Net profit attributable to shareholders for the quarterended March 31 fell to S$856 million from S$993 million for the prior-yearperiod. EPS fell to 20.6 cents from 24.9 cents.

On a cash basis excluding the amortization of intangibleassets, net profit declined to S$880 million from S$1.02 billion.

First-quarter noninterest income fell year over year toS$753 million from S$859 million. Insurance income dropped to S$122 millionfrom S$237 million due to unrealized mark-to-market losses from bond and equityinvestments. The bank's insurance unit, Great Eastern Holdings Ltd., on April 26 a 56% drop infirst-quarter net profit.

Allowances for loan losses and impairments of other assetsswelled to S$167 million from S$64 million. The nonperforming loanratio rose to 1.0% at the end of the first quarter from 0.9% a quarter earlierand 0.6% a year earlier.

The decline in noninterest income and higher provisionsovershadowed a 5% growth in net interest income, which amounted to S$1.31billion in the first quarter, compared to S$1.25 billion a year earlier.Earnings from loans increased as the net interest margin, on an annualizedbasis, widened to 1.75% at the end of the first quarter from 1.74% at the endof the 2015 fourth quarter and 1.62% as of March 31, 2015.

Total income slid to S$2.06 billion in the first quarterfrom S$2.11 billion in the prior-year period.

Operating expenses increased to S$923 million from S$873million.

As of March 31, the common equity Tier 1 capital adequacyratio was 14.6%, up from 13.5% a year earlier and down from 14.8% at the end ofthe 2015 fourth quarter. The total capital adequacy ratio rose to 17.3% from15.5% a year earlier and 16.8% as of March 31, 2015.

As of April 28, US$1 wasequivalent to S$1.35.