Oversea-Chinese Banking Corporation Limited (SGX:O39), or OCBC for short, was the last of the trio of Singapore-listed banks to make available its business update for the 3rd quarter, as well as for the first 9 months of FY2023 ended 30 September before market hours this morning (10 November) – you can check out my review for UOB’s latest business update released on 26 October here, and DBS’ latest business update released on 06 November here.

Similar to DBS and UOB, OCBC needs no further introduction – as we can also find the bank’s branches and ATMs at many locations in Singapore, where the bank is headquartered. Apart from its home country (where it is the longest established bank), OCBC also has a business presence in other countries (in fact, the bank is the 2nd largest financial services group in Southeast Asia by assets, with a high credit rating of Aa1 by Moody’s and AA- by both Fitch and S&P). However, its key markets are in Singapore, Malaysia, Indonesia, as well as in the Greater China region, and it currently has a network of more than 420 branches and representative offices in 19 countries and regions.

In the rest of this post, you will find my review of the Singapore-listed bank’s key financial figures, as well as ratios.

Let’s begin…

Key Financial Figures (Q3 FY2022 vs. Q3 FY2023, and 9M FY2022 vs. 9M FY2023)

In this section, you will find my review of some of the key financial figures reported for the 3rd quarter (i.e., Q3 FY2022 vs. Q3 FY2023), and also for the first 9 months of the year (i.e., 9M FY2022 vs. 9M FY2023):

Q3 FY2022 vs. Q3 FY2023:

Q3 FY2022Q3 FY2023% Variance
– Net Interest
Income (S$’mil)
$2,099m$2,456m+17.0%
– Net Fee &
Commission Income
(S$’mil)
$453m$461m+1.8%
– Other Non-Interest
Income (S$’mil)
$600m$512m-14.6%
Total Income
(S$’mil)
$3,152m$3,429m+13.1%
Total Expenses
(S$’mil)
$1,269m$1,340m+4.9%
Net Profit
(S$’mil)
$1,605m$1,810m+21.4%

My Observations: On the whole, it was largely an improved set of results for OCBC for the 3rd quarter of FY2023, compared against the same time period last year.

The 13.1% growth in its total income was underpinned by a 17.0% jump in its net interest income to a record high of S$2,456m. This was supported by a 6% asset growth, along with a net interest margin expansion (by 0.21 percentage points from 2.06% in Q3 FY2022 to 2.27% in Q3 FY2023) driven by higher margins across the Group’s key markets.

Net fee and commission income rose by 1.8%, marking the highest level recorded in the last 4 quarters – this was largely due to growth in wealth management fees from increased customer activities, as well as from higher credit card fees.

However, its other-non-interest income fell by 14.6% due to a 12% decline in profit from insurance, largely due to an increase in medical claims, which was partly compensated by improved investment performance.

Total expenses were up by 4.9% on the back of continued investments in the Group’s franchise across people and technology.

9M FY2022 vs. 9M FY2023:

9M FY20229M FY2023% Variance
– Net Interest
Income (S$’mil)
$5,302m$7,183m+35.5%
– Net Fee &
Commission Income
(S$’mil)
$1,453m$1,344m-7.5%
– Other Non-Interest
Income (S$’mil)
$1,499m$1,707m+13.9%
Total Income
(S$’mil)
$8,254m$10,234m+24.0%
Total Expenses
(S$’mil)
$3,727m$3,913m+4.7%
Net Profit
(S$’mil)
$4,442m$5,399m+32.2%

My Observations: The key highlight for OCBC’s results for the first 9 months of FY2023 will be its net profit, where, at S$5,399m, is a record high for the bank (this is also the first time its net profit have crossed the S$5 billion mark for the first time), on the back of a record total income (of S$10,234m).

Net interest income rose by 35.5% to S$7,183m, underpinned by 6% average assets growth, and a 0.50% percentage point expansion in its net interest margin (from 1.78% in 9M FY2022 to 2.28% in 9M FY2023).

The only slight negative was a 7.5% decline in net fee and commission income.

Finally, total expenses was up by 4.7%, mainly due to higher staff costs arising from wage increments and rise in headcount, and IT-related expenditure.

Key Financial Ratios (Q2 FY2023 vs. Q3 FY2023)

Moving on, let us take a look at some of the key financial ratios I always focus on whenever I review a bank’s results: net interest margin, return on equity, and non-performing loans ratio.

Also, when it comes to reviewing these financial ratios, I tend to take the ratios recorded in the current quarter under review (in this case, it is for Q3 FY2023 ended 30 September) and compare them against that recorded in the previous quarter (in this case, it is for Q2 FY2022 ended 30 June), and you can find them in the table below:

Q2 FY2023Q3 FY2023Difference (in
Percentage Points – pp)
Net Interest
Margin (%)
2.26%2.27%+0.01pp
Return on
Equity (%)
13.5%14.0%+0.5pp
Non-Performing
Loans Ratio (%)
1.1%1.0%-0.1pp

My Observations: The biggest highlight in my personal opinion is the 0.1pp decline in its non-performing loans ratio compared to the previous quarter, to 1.0% – which is the lowest among the 3 Singapore-listed banks (as at the end of Q3 FY2023, DBS’ non-performing loans ratio was at 1.2%, while UOB’s non-performing loans ratio was at 1.6%).

The improvement in its non-performing loans ratio was driven by declines across key markets of Singapore, Malaysia, Indonesia, as well as in Greater China.

CEO Ms Helen Wong’s Comments & Outlook (from the Bank’s Press Release)

“We are pleased to achieve a solid set of results for the nine months of 2023, backed by strong operating performance across the Group’s diversified franchise. Our total income for the nine-month period surpassed the S$10 billion mark for the first time, lifting net profit to a record high. We continued to sustain loan growth while maintaining sound asset quality, and actively managed our balance sheet which helped to drive improvements in net interest margin. Our expenses were well controlled while we stayed focused on investing in our franchise.

Looking ahead, macroeconomic conditions are expected to be clouded by growing uncertainties from inflationary risks, tightening monetary policies and heightened geopolitical risks. Nonetheless, with our robust funding, liquidity and capital positions, we are confident of the Group’s ability to deliver sustainable value to our stakeholders.”

Closing Thoughts

I’m sure you will agree with me that OCBC’s results was a strong one. Particularly, there were a number of new records set by the bank: for the 3rd quarter, its net interest income was at a record high of S$2,456m, along with its net fee and commission income being at the highest level in the past 4 quarters; for the first 9 months of the year, its total income and net profit broke the $10 billion and $5 billion mark for the first time respectively.

Another thing I like about its latest business update is the further improvement in its non-performing loans ratio (which went down by another 0.1pp from 1.1% in Q2 FY2023 to 1.0% in Q3 FY2023 due to declines in non-performing assets across key markets of Singapore, Malaysia, Indonesia, as well as in Greater China).

Finally, in case you’re wondering, as the bank declares a dividend payout on a half-yearly basis (once in the 2nd quarter, and once in the 4th quarter), there are no dividend payouts in the current quarter under review.

With that, I have come to the end of my review of OCBC’s 3rd quarter business update. I hope you’ve found the contents presented above useful, and do note that all the opinions above are purely mine which I’m sharing for educational purposes only. 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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