OCBC Group's 3Q net profit after tax up 62% to $1.23b

What spurred on the earnings spike?

Given the impressive 3Q performance, this brought the nine months core net profit to a new high.

Oversea-Chinese Banking Corporation Limited (OCBC Bank) reported a net profit after tax of S$1.23 billion for the third quarter of 2014 (3Q14), an increase of 62% from S$759 million a year ago (3Q13), according to a press release announcing the group's latest results.

The 3Q14 earnings included a one-off gain of S$391 million that arose from the Group’s increased stake in Bank of Ningbo Co., Ltd (BON), which became a 20%-owned associated company on 30 September 2014.

As a result, the Group’s initial available-for-sale 15.3% investment was deemed disposed of in accordance with accounting standards, and its related fair value reserve was recognised in the income statement as a one-off gain.

Excluding the one-off gain, the Group’s core net profit rose 11%, underpinned by strong earnings from its banking operations, which grew 30% year-on-year from increased net interest income, record fee income and higher trading income.

The Group’s third quarter core net profit included the results of the 97.5%-owned OCBC Wing Hang Bank (formerly Wing Hang Bank), following the completion of the acquisition on 29 July 2014.

OCBC Wing Hang’s net profit contribution to the Group’s consolidated results for this period was S$38 million, after merger-related adjustments primarily in depreciation and provisions.

OCBC Wing Hang became a wholly-owned subsidiary after quarter-end on 15 October 2014 and was delisted from the Hong Kong Stock Exchange on 16 October 2014.

Net interest income for the quarter increased 27% to S$1.25 billion from S$978 million a year ago, driven by strong asset growth and higher net interest margin.

Net interest margin rose 5 basis points to 1.68% from 1.63% in 3Q13, contributed by improved loan spreads and higher returns from money market activities.

Customer loans grew S$42.9 billion or 27% from a year ago to S$205 billion, with OCBC Wing Hang contributing S$24.9 billion to the increase. Excluding the consolidation effect of OCBC Wing Hang, loan growth of 11% was broad-based, led by general commerce loans, housing loans, and loans to professionals and individuals.