Singapore's Oversea-Chinese Banking Corp (OCBC), Southeast Asia's third-largest lender, posted a lower-than-expected 4 per cent fall in first-quarter profit and said it saw growth opportunities in its core markets.
OCBC's earnings reflected strong loan growth in Singapore during the first three months of 2008 thanks to a construction boom in the republic. But its profit was down from a year ago due to sharply lower earnings at its insurance arm.
Core earnings, which exclude one-time gains from the divestment of assets and tax refunds, fell 10 per cent to $460 million'Our first quarter core earnings showed resilience in spite of volatile global financial markets. We continue to see growth opportunities in our major markets for the remainder of 2008,' chief executive David Conner said in a statement.
OCBC, whose main operations are in Singapore and Malaysia, earned $622 million (US$458 million) in the three months ended March, compared with $647 million a year earlier.
Its net profit beat the $456 million average estimate of six analysts polled by Reuters as it booked a gain of $156 million from the sale of shares in commodities and property firm Straits Trading .
Core earnings, which exclude one-time gains from the divestment of non-core assets and tax refunds, fell 10 per cent to $460 million from $510 million in January-March 2007.
The bank's net interest income rose 26 per cent from a year ago to $638 million, while its loan margin increased to 2.17 per cent from 2.14 per cent at the end of December.
But non-interest income, which includes commissions and fees, fell 26 per cent to $377 million, the bank said.
'Strong growth in net interest income, fee income and foreign exchange income were offset by a significant decline in life assurance profits from Great Eastern Holdings,' OCBC said.
Great Eastern - the largest life insurer in Singapore and Malaysia - reported on Tuesday a 67 per cent fall in net profit to $45 million partly due to marked-to-market losses on its investments. OCBC owns around 87 per cent of Great Eastern.
OCBC's first quarter 2007 net profit was partly boosted by a divestment gain of $90 million from the sale of an office property, and a tax refund of $47 million.
OCBC shares fell 3.1 per cent in morning trade ahead of its results, which were released during the midday market break.
The broader market was off 1.2 per cent.
OCBC shares fell 2.3 per cent in the first quarter this year, compared with a 3.8 per cent decline for larger rivals UOB and a 13 per cent drop for DBS, Singapore's biggest bank by assets. -- REUTERS
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