Due to increased allowances and lower insurance
contributions.
Oversea-Chinese Banking Corporation Limited reported an 11%
lower profit for 2016 to $3.47b, down from $3.9b.This came against a strong
prior year performance, which included a substantial investment gain from
insurance subsidiary Great Eastern Holdings.
"The decline in earnings was also driven by a rise in
net allowances and lower trading and insurance income, which more than offset
the impact of strong wealth management fee income growth and increased
contributions from our Indonesia and Hong Kong banking subsidiaries," OCBC
said.
The group's full-year earnings also included the one-month
consolidated results of the former wealth and investment management business of
Barclays PLC in Singapore and Hong Kong which was acquired by Bank of Singapore
at the end of November 2016. Its assets under management of US$13b were
transferred to BOS for a consideration of US$228m. However, the one-month
profit contribution was not material relative to the Group’s 2016 earnings.
For the said year, the group's net interest income fell 3%
from the previous year to $5.05b, mainly from a decline in average
interest-earning assets, led by a drop in interbank placements. Net interest
margin of 1.67% was unchanged year-on-year.
The group incurred a $3.79b operating expenses for the year,
a modest increase of 3% from a year ago. The Group’s cost-to-income ratio was
44.6% as compared to 42.0% in the previous year.
Excluding the consolidation of
Barclays WIM and the associated integration expenses, operating expenses were
2% higher than FY15, which reflected overall continued cost discipline and
tightly controlled headcount growth. Allowances for loans and other assets of
$726m were higher than $488m a year ago, mainly led by an increase in specific
allowances for corporate accounts in the oil and gas support services sector which
the Group has been closely monitoring.
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