Net interest income up 2% to S$2.43 billion in forecast-beating performance.

OCBC’s net profit for the second quarter ended June rose 14 per cent to S$1.94 billion, from S$1.71 billion in the previous corresponding period.

The bank said this was underpinned by income growth and a decline in allowances.

Total income rose 5 per cent on the year to S$3.63 billion from S$3.46 billion, with net interest income inching up 2 per cent to S$2.43 billion, from S$2.39 billion previously.

The slightly-higher net interest income was led by a 5 per cent increase in average assets, and partially offset by a six basis point (bps) drop in net interest margin to 2.2 per cent.

Non-interest income grew 13 percent to S$1.2 billion, mainly from higher fee, trading and insurance income growth.

Total allowances fell 43 per cent on the year to S$144 million from S$252 million, as a result of a decline in allowances for non-impaired assets.

Operating expenses rose 3 per cent to S$1.37 billion, driven mainly by higher staff and information technology-related costs. Cost-to-income ratio was lower at 37.8 per cent; this was 0.7 percentage point lower than the 38.5 per cent in Q2 FY2023.

Credit costs for the quarter stood at 15 bps, 6 bps lower than in Q2 FY2023, and one bps lower than in Q1 FY2024.

Annualised return on equity rose 0.7 percentage point to 14.2 per cent for the quarter, from 13.5 per cent in the prior year.

For the first half of the year, net profit rose 9 per cent year on year to S$3.93 billion. Meanwhile, total income was 7 per cent higher at S$7.26 billion, from S$6.81 billion.

The lender said this came on the back of strong contributions from the banking, wealth management and insurance franchise.

As at end-June, customer loans grew 3 per cent on a constant currency basis to S$304 billion from S$297 billion in the previous corresponding period, driven mainly by non-trade corporate and housing loans.

The loans-to-deposits ratio stood at 81.1 per cent, higher than 78.8 per cent in the previous year.