Investing.com-- Oversea-Chinese Banking Corp (SGX:OCBC) on Friday clocked a 3% rise in its third-quarter net profit as expected, as steady interest income growth helped offset slimmer margins and rising funding costs.
Group net profit for the three months to September 30 rose to S$2.04 billion ($1.60 billion) from S$1.98 billion a year ago. The print was a touch above Bloomberg estimates for a S$2.0 billion profit.
Net interest income, the bank's biggest revenue source, grew 4% year-on-year to S$2.31 billion, while non-interest income, which comes from fees, trading, and insurance, fell 10% to S$1.42 billion.
Interest income was buoyed by growth in the bank's assets and higher yields, but was partially offset by a rise in funding costs, especially in the U.S., as interest rates rose.
The decline in non-interest income stemmed chiefly from a sluggish performance in Great Eastern Holdings– OCBC's trading and insurance arm. Trading activity was pressured by rising interest rates, which largely offset resilience in the unit's core insurance business.
OCBC, which ranks among Singapore's big three banks and is among the largest lenders in Southeast Asia, was pressured by a rise in U.S. interest rates, which pressured margins in the quarter.
But higher Singapore interest rates helped partially offset this impact.
The bank also fared relatively better than peers United Overseas Bank Ltd (SGX:UOBH) and DBS Group Holdings (SGX:DBSM) in the quarter, both of whom clocked disappointing Q3 prints on a drop in trading income.
OCBC CEO Tan Teck Long flagged continued uncertainty in global economic conditions, amid geopolitical tensions and soaring inflation.
Original Article
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