OCBC’s FY13 profit was better than expected. Net interest income rose 5.5% QoQ as customer loans rose 4.8% QoQ and 17.9% YoY on the back of China-related, USD-trade finance loans. The numbers explain why OCBC is keen to acquire Wing Hang bank. OCBC recorded the biggest time deposit growth among peers for 4Q (+8% QoQ) without impacting its net interest margin (NIM). Great Eastern Holdings also contributed positively to the earnings report with total weighted new sales up 27% YoY and new business embedded value up 22% YoY.
In terms of the outlook for 2014, the management guided for 1) loan growth of 11-13% in 2014 driven by trade, 2) stable NIMs, 3) cost pressures from compliance costs and IT investments, and 4) no asset quality issues. Domestic loan growth is likely to be weak and OCBC will focus on faster-growing markets in ASEAN and Greater China.
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