OCBC’s Q4 net profit down 16% to $428m

Singapore’s Oversea-Chinese Banking Corp (OCBC) said Thursday its fourth quarter net profit fell 16 percent from a year ago in the absence of one-time gains and higher expenses offsetting strong revenues.

Net profit was S$428 million compared with S$510 million a year ago when it was bloated by divestment gains. Revenue totalled S$1.08 billion, up 19 percent from the same period last year, the bank said in a statement.

Net interest income – difference between the interest earned and interest paid on deposits and other liabilities – climbed 25 percent from the year before and 9.0 percent from the previous three months as loans expanded.

Non-interest income, including earnings from fees and commissions, was up 12 percent from the same quarter last year.

Expenses during the quarter jumped 42 percent to S$485 million as the bank raised salaries and gave out incentives.

For the full year, net profit rose 3.0 percent to S$2.07 billion on revenue of S$4.12 billion, up an annual 29 percent, on higher income from interest and fees.

OCBC’s loan book rose 19 percent, boosted by growth in business loans in Singapore, Malaysia and other overseas markets.

Expenses for the financial year rose 26 percent to S$1.68 billion, about 41 percent of which was associated with overseas business expansion in China and Indonesia.

For the full year, OCBC said it made allowances of S$226 million for investments in collateralised debt obligations (CDOs) with some exposure to risky US mortgages.

Bank chief executive David Conner was cautious about prospects for 2008. “Given the ongoing concerns over the effects of the US sub-prime crisis and a possible US recession, the economic outlook for 2008 is uncertain,” he said.

“We will nevertheless continue to work hard to deliver growth by expanding
our customer franchise throughout the region.” – AFP/ir

Source : Channel NewsAsia – 21 Feb 2008

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