Along with UOB (you can read my review about its third quarter business update here), Oversea-Chinese Banking Corporation Limited, or OCBC for short (SGX:O39) have also released its business update for the third quarter of the financial year ended 30 September last Wednesday (03 November 2021) morning.

Just like UOB, OCBC have also switched to half-yearly reporting since last year, and as such, it only released key financial performance figures and ratios for the current quarter under review. Also, the bank did not declare any dividend payouts this time round (as its management only declare a dividend payout when they release their second and fourth quarter results.)

In this post, you’ll find key aspects about the Singapore bank’s financial results and ratios to take note of.

Let’s begin…

Key Financial Performance Figures (Q3 FY2020 vs. Q3 FY2021, and 9M FY2020 vs. 9M FY2021)

First, let us take a look at the bank’s key financial performance figures on a quarter-on-quarter (q-o-q) basis, as well as on a year-on-year (y-o-y) basis:

Q3 FY2020 vs. Q3 FY2021:

Q3 FY2020Q3 FY2021% Variance
– Net Interest
Income (S$’mil)		$1,421m$1,461m+2.8%
– Net Fee & Commission
Income (S$’mil)		$501m$569m+13.6%
– Other Non-Interest
Income (S$’mil)		$617m$530m-14.1%
Total Income
(S$’mil)		$2,539m$2,560m+0.8%
Total Expenses
(S$’mil)		$1,098m$1,188m+8.2%
Net Profit
(S$’mil)		$1,028m$1,224m+19.1%

OCBC’s total income, on a q-o-q basis, edged up 0.8%, helped by a 2.8% increase in its net interest income (due to a 4% increase in average loan values, but offset by a 2 basis points decline in its net interest margin – from 1.54% in Q3 FY2020 to 1.52% in Q3 FY2021), as well as in its net fee and commission income (driven by broad-based fee growth associated with the rise in customer transactions and business activities), offset by a 14.1% drop in its other non-interest income (due to a decline in its net trading income as a result of unrealised mark-to-market losses in Great Eastern Holdings’ investment portfolio.)

Along with a 33.7% decline in allowances for loans and other assets (from $350m in Q3 FY2020 to $163m in Q3 FY2021), the bank’s net profit saw a 19.1% improvement to $1,224m (compared to $1,028m in Q3 FY2020.)

9M FY2020 vs. 9M FY2021:

9M FY20209M FY2021% Variance
– Net Interest
Income (S$’mil)		$4,530m$4,363m-3.7%
– Net Fee & Commission
Income (S$’mil)		$1,487m$1,718m+15.5%
– Other Non-Interest
Income (S$’mil)		$1,637m$1,965m+20.0%
Total Income
(S$’mil)		$7,564m$8,046m+5.1%
Total Expenses
(S$’mil)		$3,314m$3,476m+4.9%
Net Profit
(S$’mil)		$2,455m$3,885m+58.2%

On a y-o-y basis, its total income managed to grow by 5.1% compared to the same time period last year – largely attributable to a 15.5% increase in its net fee and commission income, along with a 20.0% increase in its other non-interest income (which is contributed by improvements in its trading income and profit from life insurance), offset by a 3.7% drop in its net interest income (as a result of a 8 basis point decline in its net interest margin from 1.63% in 9M FY2020 to 1.55% in 9M FY2021, offset by a 2% asset growth.)

The growth in its total income, along with a smaller percentage increase in its total expenses in the same time period, and also a huge decline in the allowances for loans and other assets (which went down significantly from $1,758m in 9M FY2020 to just $555m in 9M FY2021), saw its net profit soared by 58.2% to $3,885m.

Key Financial Ratios (Q2 FY2021 vs. Q3 FY2021)

Moving on, let us take a look at some of the key financial ratios (these are the ratios I focus my attention on whenever I study a bank’s quarterly performance) the bank reported for the current quarter under review (i.e. Q3 FY2021 ended 30 September 2021), compared against the ratios reported in the previous quarter (i.e. Q2 FY2021 ended 30 June 2021):

Q2 FY2021Q3 FY2021Difference (in
Percentage Points – pp)
Net Interest
Margin (%)		1.58%1.52%-0.06pp
Return on
Assets (%)		1.11%1.13%+0.02pp
Return on
Equity (%)		9.3%9.5%+0.02pp
Loan/Deposit
Ratio (%)		85.6%84.5%-1.1pp
Non-Performing
Loans Ratio (%)		1.5%1.5%–

My Observations: Apart from a 0.06pp decline in its net interest margin compared to the previous quarter (as a result of lower asset yields and gapping income, and interest reversals), all the other statistics above remained more or less stable.

Closing Thoughts

The only damper about OCBC’s latest set of results is the 0.06pp decline in its net interest margin compared to the previous quarter. Apart from that, the latest set of results reported by the Singapore bank was largely within my expectations.

With that, I have come to the end of my review on OCBC’s latest business update. Please note that everything you’ve just read above is purely for educational purposes only, and they do not imply any buy or sell recommendations for the bank’s shares. You should always do your own due diligence before you make any investment decisions.

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Disclaimer: At the time of writing, I am a shareholder of Oversea-Chinese Banking Corporation Limited.

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