SINGAPORE – Oversea-Chinese Banking Corp, Singapore’s second-biggest lender, reported a bigger-than-expected 18 per cent drop in quarterly net profit to the lowest level in three years, dragged down by a 57 per cent jump in bad debt charges.
Singapore banks’ exposure to the stressed oil services sector and slowing loan growth due to slack regional trade are clouding prospects for the country’s lenders.
OCBC CEO Samuel Tsien said the bank’s overall portfolio quality remained sound, but there “continued to be stresses … particularly within the oil and gas support services sector which drove increases in non-performing loans and allowances.”
Kicking off the sector’s reporting season, OCBC’s net profit came in at S$789 million ($571 million) in the three months ending December, versus S$960 million a year earlier and an average forecast of S$856 million from six analysts polled by Reuters.
Full-year net profit fell 11 per cent.
OCBC’s net allowances for loans and other assets rose to S$305 million in the fourth quarter from a year earlier.
Singapore’s biggest bank, DBS Group Holdings, and No. 3 lender, United Overseas Bank, report results later this week.
