Oversea-Chinese profit beats estimates on insurance, trading

Oversea-Chinese Banking Corp., the Singapore lender that owns the island’s biggest life insurer, posted a better-than-estimated 9.6 percent increase in second- quarter profit on higher insurance and trading income.

Net income climbed to S$466 million ($324 million) in the three months ended June 30 from S$425 million a year earlier, the bank said in a statement today. The average estimate was for profit of S$356 million, according to a Bloomberg survey of six analysts.

Oversea-Chinese shares have jumped 55 percent this year amid signs Singapore’s economy is recovering. Bank of America Corp.’s Merrill Lynch & Co. increased its ratings on the company and larger DBS Holdings Ltd. on July 24, citing the potential for a strengthening economy.

“The pace of recovery remains uncertain,” Oversea-Chiese Chief Executive Officer David Conner said in today’s statement. “There is growing consensus that the worst is over for the global economy and financial markets.”

Net interest income, or the difference between what the bank makes from lending and what it pays on deposits, rose 5 percent to S$710 million in the quarter. The net interest margin, a measure of loan profitability, widened by 5 basis points to 2.29 percent. One basis point is 0.01 percentage point.

Fee income jumped 37 percent from a year earlier to S$494 million, Oversea-Chinese said.

Great Eastern Holdings Ltd., the bank’s insurance unit, on July 31 said second-quarter net income rose more than five times to S$97.7 million. Oversea Chinese’s profit from life insurance almost quadrupled to S$125 million, today’s statement said.

Total loans in Singapore rose to S$272.2 billion in June from S$270.8 billion a month earlier, the highest since November, according to data from the Monetary Authority of Singapore. Singapore’s gross domestic product will shrink 4 to 6 percent this year, less than an earlier forecast for a contraction of as much as 9 percent, the trade ministry said July 14.

Oversea-Chinese fell 11 cents, or 1.41 percent, to S$7.71 at the midday trading break, before earnings were announced.

Source: Bloomberg

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