OCBC’s Q4 earnings up 18%

OCBC Bank

SINGAPORE: OCBC Bank, Singapore’s second biggest lender, reported a better—than—expected fourth quarter net profit of S$594 million, up 18 percent on—year.

At a briefing on Monday, its outgoing CEO David Conner attributed the increase to higher net trading income of S$163 million, reversing the previous quarter net trading income loss of S$68 million.

Mr Conner will hand the reins to his successor Samuel Tsien after he retires in mid—April.

Chairing his last financial results briefing as the CEO of OCBC Bank, he paid tribute to staff who have helped grown the bank in the past decade.

Mr Conner said: "This is not intended to be a David Conner ego trip. This is really all about the OCBC team that has delivered some fantastic results over the last ten years."

Under his watch, the bank’s net profit increased more than three—fold to S$2.31 billion, while its customer base rose four—fold to more than 7 million.

OCBC’s market capitalisation also more than doubled to S$30.43 billion since 2002.

His successor Mr Tsien, Global Head, Global Corporate Bank, OCBC Group, will be looking at extending the bank’s good run.

Mr Tsien said: "We expect that not only will this transition be very non—eventful, but it will also be a continuation of the strategy that we have been adopting."

Mr Conner said: "Yes I give him occasional tips.. But (Samuel)’s going to be his own man for sure — there’s no question about that."

Over the next few months leading to Mr Conner’s retirement on 14 April, the two of them will be travelling together to meet investors and employees around the world.

In the fourth quarter, OCBC posted an 18 percent on—year increase in net profit.

Non—interest income (the money it makes from trading and fees) was flat year—on—year at S$572 million, rising by only 2 percent in the quarter.

Meanwhile, net interest income rose 20 percent to S$925 million, as robust loan growth offset the lower net interest margins due to the low interest rate environment.

For 2011, the bank booked a net profit of S$2.31 billion — up 3 percent against 2010.

OCBC’s stock closed marginally higher on Monday after it reported its earnings.

The counter rose 10 cents to S$8.95.

Analysts say it indicates that investors are still confident, but they will keep an eye on how the new CEO plans to drive further growth as competition heats up.

Jonathan Koh, Associate Director, UOB Kay Hian Research, said: "Overall I think — in terms of the broadening of the business — Mr Conner’s achievement is just quite remarkable. So for the new CEO — it is pretty unfortunate — because it is very difficult to match what Mr Conner has done. For the stock market, investors may choose to be convinced that we may see a big impact or big change at OCBC. So if we don’t see that, they may take a more laidback approach."

OCBC has proposed a final dividend of 15 cents per share, bringing its full—year payout to 30 cents per share, unchanged from 2010.

— CNA/cc/ch