The second-quarter performance was lower than the average forecast of S$601.8 million by analysts polled by Dow Jones. Net interest income grew to S$827 million, also up 15 per cent from the same quarter a year ago, primarily on the back of loan growth of 27 per cent across various industry sectors in Singapore and key markets overseas.
OCBC CEO David Conner said: "We're happy with the growth but it is pretty fast. That is likely to moderate. We're thinking in terms of between 20 and 21 per cent for full-year loans growth."
Net interest margin, however, narrowed to 1.87 per cent in the quarter from 1.96 per cent a year earlier due to low interest rates, growth in lower-yielding loans linked to trade and price competition for housing loans.
OCBC said it had rebalanced its books towards better quality, lower-risk loans. The company reported that non-performing loans (NPL) fell by 6 per cent from the previous quarter to S$913 million, and that the NPL ratio had improved to 0.8 per cent, down from 0.9 per cent in the previous quarter and from 1.3 per cent a year earlier.
OCBC's earnings results come after DBS, Singapore's biggest bank, last week posted a quarterly profit that was slightly above analyst forecasts, helped by strong loan growth.
OCBC said that, while it remained focused on expanding its regional franchise, it is concerned about its investments in Indonesia following reports that the country is considering rules to limit ownership in local banks. OCBC has a 85-per-cent shareholding in Jakarta-based Bank OCBC NISP.
Mr Conner said: "It's not wise when you are seeking significant foreign direct investment (FDI), particularly as Indonesia is doing for its infrastructure needs. It's not wise to go out and hit other foreign direct investors and force them to sell down. I think that our input to the government of Indonesia would be to consider this very carefully, because you may wind up being frustrated trying to raise FDI."
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