SINGAPORE (Reuters) - Singapore’s Oversea-Chinese Banking Corp Ltd and United Overseas Bank Ltd reported strong quarterly net profit growth on Wednesday, driven by a rise in net interest income, and downgraded their exposure to the weak offshore support services sector. The results came after top lender DBS Group Holdings Ltd matched market estimates last week with a 33 percent rise in quarterly profit. DBS had surprised markets in November by doubling its quarterly provisions to the oil and gas sector. [L4N1PV2P5]
“Given the prolonged uncertainty and the lack of firm visibility in the offshore support services and vessels (OSV) sector, the group took a prudent stance to further downgrade its OSV exposures and made appropriate allowances,” OCBC, the city state’s No.2 lender, said in a statement.
It said in the fourth quarter it “applied S$887 million of cumulative portfolio allowances to cater for additional specific allowances.”
OCBC’s October-December net profit came in at S$1.03 billion ($779 million), versus S$789 million a year earlier and compared with the S$958 million average estimate of seven analysts compiled by Reuters.
United Overseas Bank, the smallest listed lender, reported a 16 percent rise in quarterly net profit to S$855 million versus S$739 million a year earlier, and compared with the S$897 million average estimate of five analysts compiled by Reuters.
“In 4Q17, specific allowance rose to S$781 million in the latest quarter as the residual vulnerable exposures in the oil and gas and shipping sectors were recognised as non-performing assets with collateral valuation marked down as part of our ongoing portfolio assessment...” it said.
($1 = 1.3227 Singapore dollars)
Reporting by Anshuman Daga; Editing by Stephen Coates