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    D05   SG1L01001701


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Singapore's OCBC shocks with near two-year low quarterly profit, cautious on outlook

02/21/2019 | 11:59pm EST
A woman walks into an OCBC Premier Banking branch in Singapore

SINGAPORE (Reuters) - Singapore's Oversea-Chinese Banking Corp Ltd unexpectedly reported its lowest quarterly profit in nearly two years, pinning the blame on its insurance unit and saying a slowing economy will intensify challenging business conditions.

The result on Friday came as Singaporean banks gear up for tougher times after three years of strong loan growth as the city-state's export-reliant economy slows, partly due to the impact of a trade war between the United States and China.

OCBC's weak earnings came from practically every part of its business coupled with a significant jump in its non-oil non-performing loans, Nomura analyst Marcus Chua said in a report.

"A perfect storm found its way to OCBC's earnings," Chua said.

October-December net profit fell 10 percent to S$926 million ($684 million) from the same period a year earlier. The result compared with the S$1.17 billion average of four analyst estimates, according to data from Refinitiv.

Explaining the decline, OCBC said market uncertainty and a challenging environment particularly affected the investment portfolio of subsidiary Great Eastern Insurance Holdings Ltd.

In contrast, domestic peer United Overseas Bank Ltd (UOB) reported a 7 percent rise in fourth-quarter net profit on Friday. On Monday, Singapore's biggest lender, DBS Group Holdings Ltd, posted an 8 percent profit increase.

OCBC's share price fell 1.9 percent after the results while the broader benchmark index lost 0.4 percent. UOB was also down 1.8 percent, but DBS was up 0.6 percent.

"We expect Singapore's commercial banking sector to face a more challenging operating environment in 2019, which will put further downside pressure on loan growth," Fitch Solutions said in a report last month, citing a slowing Singaporean economy.

For all of 2018, Singapore's biggest three banks reported record full-year earnings, supported by improved net interest margins and higher interest rates. Net profit rose 11 percent at OCBC, 18 percent at UOB and 28 percent at DBS.

"Looking ahead, global economic growth is expected to slow on concerns of continued trade and geopolitical tensions, subdued market and investment sentiments and rising policy risks in the advanced economies," OCBC Chief Executive Samuel Tsien said in a statement.

(Reporting by Anshuman Daga; Editing by Stephen Coates and Christopher Cushing)

By Anshuman Daga

ę Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
DBS GROUP HOLDINGS LTD -0.25% 31.47 End-of-day quote.25.68%
GREAT EASTERN HOLDINGS LIMITED -0.20% 20.2 End-of-day quote.1.00%
LETS HOLDINGS GROUP CO., LTD. 1.98% 6.71 End-of-day quote.-13.75%
LOOK HOLDINGS INCORPORATED 3.18% 1298 End-of-day quote.35.63%
OVERSEA-CHINESE BANKING CORPORATION LIMITED -0.09% 11.29 End-of-day quote.12.23%
THE EASTERN COMPANY 2.17% 24.93 Delayed Quote.1.24%
UNITED OVERSEAS BANK LIMITED 0.46% 26.32 End-of-day quote.16.51%
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Sales 2021 14 590 M 10 645 M 10 645 M
Net income 2021 6 840 M 4 990 M 4 990 M
Net Debt 2021 - - -
P/E ratio 2021 11,8x
Yield 2021 3,74%
Capitalization 80 826 M 58 938 M 58 969 M
Capi. / Sales 2021 5,54x
Capi. / Sales 2022 5,23x
Nbr of Employees 32 341
Free-Float 98,6%
Duration : Period :
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Mean consensus BUY
Number of Analysts 21
Last Close Price 31,47 SGD
Average target price 35,63 SGD
Spread / Average Target 13,2%
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Managers and Directors
Piyush Gupta Vice Chairman & Chief Executive Officer
Sok Hui Chng Chief Financial Officer
Lim Huat Seah Non-Independent Non-Executive Chairman
Jimmy Ng Chief Information Officer & Head-Operations
Chee Kin Lam MD, Head-Legal & Group Compliance Officer
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