Singapore Ocbc Group Tender

Oversea-Chinese Banking Corporation Limited OCBC Bank reported a 6 rise in net profit after tax to a new high of S2.45 billion for the first half of 2019 1H19 driven by earnings growth across the Groups banking and insurance business.For the second quarter ended 30 June 2019 2Q19 net profit increased 1 to S1.22 billion from S1.21 billion reported a year ago 2Q18. This was attributed to record earnings from the Groups banking franchise which more than offset lower income contributions from the Groups insurance subsidiary Great Eastern Holdings GEH. Net interest income for 2Q19 grew 10 year-on-year to a new high of S1.59 billion largely driven by a 4 increase in customer loans and a rise in net interest margin NIM of 12 basis points to 1.79 attributed to increased asset yields in Singapore Hong Kong and China.Non-interest income for the quarter of S1.03 billion was 1 above S1.02 billion a year ago despite a 26 decrease in life insurance profit from GEH attributed to a decline in the discount rate used to value long-term insurance contract liabilities which was partly offset by better investment performance. Wealth management fees rose 8 to their highest level in five quarters and drove the Groups net fees and commissions to S522 million. Net trading income of S193 million comprising primarily of treasury-related income from customer flows was slightly above S192 million a year ago. Net realised gains from the sale of investment securities were S48 million higher than S2 million in 2Q18.Operating expenses from the Groups banking operations rose 7 to S1.08 billion mainly from higher staff-related costs associated with annual salary increments and a rise in headcount to support business needs. For the Group operating expenses were up 11 at S1.15 billion from S1.04 billion in 2Q18 which included an expense accrual reversal a year ago. The cost-to-income ratio CIR for the quarter was 44.0. Net allowances for loans and other assets were S111 million in 2Q19.The Groups share of results of associates grew 30 to S146 million from S112 million in 2Q18.Against the previous quarter 1Q19 the Groups net profit was relatively unchanged but profit from banking operations increased over 15. Net interest income rose 4 quarter-on-quarter driven by loan growth and a 3 basis points increase in NIM. Non-interest income fell 10 despite a 5 rise in fee income attributed to a decrease in life insurance profit as a result of a decline in the discount rate used to value long-term insurance contract liabilities. Operating expenses were up 5 quarter-on-quarter largely due to higher staff costs. Net allowances for loans and other assets fell 56 to S111 million from S249 million in 1Q19.First Half PerformanceThe Group delivered a record net profit after tax for 1H19 of S2.45 billion an increase of 6 over S2.32 billion a year ago 1H18.Net interest income rose 9 to S3.12 billion from S2.87 billion in 1H18 led by loan growth and an 11 basis points increase in NIM as higher asset yields outpaced the rise in funding costs. Non-interest income grew 12 year-on-year to S2.17 billion from both banking and insurance operations. Net fee and commission income fell 4 to S1.02 billion while net trading income of S478 million was significantly above S286 million in 1H18. Net gains from the sale of investment securities were higher year-on-year at S82 million and insurance income increased 6 to S464 million.The Groups overall income from wealth management activities comprising income from insurance private banking asset management stockbroking and other wealth management products rose 12 to S1.67 billion from S1.49 billion a year ago. The wealth management franchise contributed 32 to the Groups total income as compared with 31 in 1H18. Assets under management AUM at Bank of Singapore increased 9 year-on-year underpinned by continued net new money inflows to a new high of US111 billion S151 billion as at 30 June 2019.CIR of 42.4 improved from 43.0 in the previous year. Operating expenses of S2.25 billion were 9 higher than a year ago mainly attributed to higher staff costs.Share of profits from associates grew 33 to S316 million from S237 million a year ago.Annualised return on equity was 11.7 for 1H19 as compared to 11.5 for the full year of 2018 FY18. Annualised earnings per share rose to S1.15 higher than S1.06 for FY18. Allowances and Asset QualityThe overall asset quality of the Groups loan portfolio continued to be sound. As at 30 June 2019 total non-performing assets decreased slightly to S3.91 billion from S3.92 billion in the previous quarter. The non-performing loans ratio remained stable quarter-on-quarter at 1.5.Net allowances for loans and other assets declined 56 from the previous quarter to S111 million in 2Q19. These mainly comprised allowances for impaired loans of S93 million which were lower than S231 million in 1Q19 as well as allowances for non-impaired loans of S18 million. Total loan allowances for the quarter were 15 basis points of loans on an annualised basis down from 35 basis points in 1Q19.Funding and Capital PositionThe Groups funding and capital position remained strong. Customer loans grew 4 year-on-year to S263 billion as at 30 June 2019. Customer deposits increased 2 to S297 billion led by a 3 rise in current account and savings deposits which represented 47.9 of total non-bank deposits. The Groups loans-to-deposits ratio was higher at 87.6 as compared to 85.9 a year ago.The average Singapore dollar and all-currency liquidity coverage ratios for the Group in 2Q19 were 255 and 151 respectively while the net stable funding ratio was 109.