Singapore’s Oversea-Chinese Banking Corp beat expectations with an 11 percent rise to record quarterly net profit, as the consolidation of its newly acquired Hong Kong lender Wing Hang Bank helped it post robust loan growth.
But smaller rival United Overseas Bank booked a 1.6 percent rise in first-quarter profit, narrowly missing analysts’ forecasts.
Despite a slowdown in the domestic property market and China-linked trade loans, Singapore’s banks have managed steady earnings growth although analysts are predicting that pace will weaken in the coming quarters.
Net income for OCBC, Singapore’s second-biggest bank, came in at S$993 million ($751 million) in the three months ended in March, about 12 percent above analysts’ estimates and joining sector leader DBS Group Holdings in posting record earnings for the quarter.
With the inclusion of Wing Hang Bank, customer loans surged 20 percent in the quarter, though that was a milder 4 percent without it.
“The solid set of results demonstrates the increased diversity of our earnings base, and the progress that we are making in deepening our presence in our key markets,” OCBC CEO Samuel Tsien said in a statement.
United Overseas Bank, Singapore’s third-biggest lender, booked S$801 million ($606 million) in net profit, on loan growth of 7.8 percent from a year earlier.
Its loans grew 4.3 percent in Singapore, but jumped an average 15 percent in countries in the Southeast Asian region which accounts for a third of its loan portfolio.
DBS reported first-quarter loan growth of 11 percent but forecast 2015 loan growth would be a slower 6 percent on a constant currency basis, down from a earlier forecast of 8 percent.
Rating agency Moody’s Investor Service said the slowdown in the domestic property market due to government imposed cooling measures had made for an improved balance of risk for Singapore’s banks.
“This is positive for the quality of new loans granted by Singapore banks because these loans are granted under stricter criteria,” Eugene Tarzimanov, senior credit officer at Moody’s Financial Institutions Group Asia Pacific told Reuters.