OCBC Q3 Profits Up 22% To $463m

Source : The Business Times, November 6, 2007

Oversea-Chinese Banking Corp, Singapore's third biggest bank, said its quarterly profit rose 22 per cent, beating expectations, and unveiled a $221 million (US$152 million) charge to account for losses from the credit market turmoil.

OCBC made a net allowance of $39 million in Q3, compared to $3 million allowance the same period last year

The bank reported net profit of $463 million for the July-September period, up from $379 million a year ago and against an average forecast of $417 million by five analysts polled by Reuters.

The bank said on Tuesday that Asian growth opportunities were encouraging, following a third quarter that saw global credit and equity markets suffer sharp falls after defaults in the US sub-prime mortgage market spread to hammer financial stocks.

Global credit and equity markets experienced sharp falls in the third quarter after defaults in US sub-prime mortgage market spread, drying up liquidity in credit markets, hammering valuations of financial securities and causing hefty losses in bank earnings across the globe.

Related link- http://tinyurl.com/yw428q
OCBC's media release

OCBC took an allowance worth $221 million against its exposure of $270 million in asset-backed collateralised debt obligations (CDOs), though this was offset to a net $39 million by write-backs on allowances for loan and property assets.

Last month, No 2 United Overseas Bank, posted a below-expected 8.2 per cent rise in quarterly profit as trading and investment income was hit by US credit turmoil.

DBS Group, Southeast Asia's biggest lender by assets, posted a better-than-expected 11 per cent rise in quarterly profit on strong loan and fee growth, despite taking a small hit from the credit turmoil.

Shares of OCBC and DBS were hit in the third quarter by the global credit squeeze.

OCBC dropped 2.7 per cent, DBS fell 5.3 per cent, while UOB, which has benefited from Singapore's property boom, rose 0.5 per cent in the quarter. All lagged a 4.5 per cent gain in the benchmark Straits Times index. -- REUTERS