SINGAPORE, Feb 28 — Singapore’s second-largest bank Oversea-Chinese Banking Corp (OCBC) said it expected interest rates to trend downwards, likely from second half of 2024, after posting a 12 per cent jump in fourth-quarter net profit that missed expectations.
Against that backdrop, OCBC said it was targeting 2024 net interest margin (NIM), a key profitability gauge, to be in the range of 2.20 per cent to 2.25 per cent, lower than 2023 NIM of 2.28 per cent, according to OCBC‘s Group CEO Helen Wong’s presentation slides accompanying the earnings results.
Return on equity (ROE) in 2024 was set to range between 13 per cent and 14 per cent, versus 13.7 per cent in 2023, while loan growth is expected to be in the low single digits, according to the slides. Credit costs, or allowances for loans as a percentage of average loans, were forecast at between 20 to 25 basis points versus 20 bps in 2023.
“Looking ahead, we anticipate challenges in the global macro environment, including changes in monetary policies, persistent inflationary pressures, major elections and rising geopolitical tensions,” Wong said in a separate press statement.
“Nonetheless, we believe that Asia holds immense growth potential,” she added.
OCBC‘s results rounded up a strong fourth-quarter earnings season by Singapore banks, the largest in Southeast Asia, which posted higher profits for the fourth quarter because of higher interest rates, though growth momentum is poised to slow as big central banks pivot toward rate cuts and volatile markets weigh on their mainstay wealth businesses.
Larger rival DBS Group posted this month a 2% rise in fourth-quarter net profit that beat forecasts and also projected its 2024 net interest margin to be slightly below last year because interest rates are expected to soften.
— Reuters
