Oversea-Chinese Banking Corporation (OCBC SP) BUY1Q22 Flash Note
Analyst: Jonathan Koh, CFA
- OCBC reported net profit of S$1,356m for 1Q22 (down 10% yoy and up 39% qoq), above our forecast of S$1,110m.
- Loans expanded 8% yoy and 1% qoq. NIM expanded 3bp qoq to 1.55% driven by an increase in loan yield.
- Fees were down 11% yoy but flat qoq. Contribution from wealth management dropped 20% yoy but increased 3% qoq.
- Contributions from life and general insurance was resilient at S$330m, down 30% yoy (high base last year) but was up 10% qoq. It benefitted from mark-to-market gains from a decline in insurance contract liabilities due to utilisation of a higher discount rate to value these liabilities. Net trading income was also stable at S$225m.
- Operating expenses increased 5% yoy but receded by 7% qoq compared to elevated levels in 4Q21.
- Total provisions was only S$44m in 1Q22, which were 73% lower yoy. New NPL formation was S$296m, significantly lower than S$1.06b in 4Q21. NPL ratio improved 0.1ppt qoq to 1.4%.