SINGAPORE - Oversea-Chinese Banking Corp , Singapore's second-biggest lender, posted a worse-than-expected 14 per cent drop in quarterly profit due to an increase in bad debt charges and a lower contribution from its insurance unit.
The bank said the near-term outlook was uncertain as Singaporean lenders struggle with shrinking profits due to slowing Asian economies, particularly China, and weak commodity prices that have boosted provisions on loans to energy services firms.
OCBC's net profit came in at S$856 million in the three months ended March, versus S$993 million a year earlier, and compared with an average forecast of S$934 million from five analysts polled by Reuters. It was the lowest net profit since the fourth quarter of 2014.
Bad debt charges more than doubled to S$167 million in the first quarter from a year earlier, while contributions from insurance unit Great Eastern dropped 58 per cent due to mark-to-market losses.
The bank said the significant decline in commodity prices contributed to the stress in the oil and gas support services portfolio.
Fee and commission income fell 5 per cent mainly from lower wealth management as well as trade-related and investment banking fees, as investment appetite was weak during first half of the quarter.
Smaller rival United Overseas Bank on Thursday had reported a 4.4 per cent fall in first-quarter net profit, in line with expectations, after lower wealth management fees and trading income hit non-interest income