SINGAPORE: OCBC Bank Ltd, Singapore's third biggest lender, has reported an unexpectedly large 26% drop in first-quarter net profit, hurt by a weak equity market and the country’s slowing economy.
The bank also said its outlook depended on the duration of the Severe Acute Respiratory Syndrome (SARS) outbreak, which has killed 28 people here and taken a heavy financial toll on the tourism and service industries.
For the three months to March 31, OCBC posted a net profit of S$159.4mil, down from S$215.34mil a year ago and lower than the average forecast for S$187mil.
Daiwa Institute of Research analyst David Lum said the bank's revenues were disappointing but its provisions for possible bad debts were better than expected.
The provisions made for the quarter by OCBC, which also has a 25-branch network in Malaysia, were 30% lower at S$63.8mil. It said weak property prices had continued to hurt collateral values.
“It is clear that the headline numbers aren’t so great,” OCBC chief executive David Conner told a results briefing. He said the 15% fall in operating profit to S$298mil was caused by “a very unfriendly business environment”, hurt by the Iraq war and the SARS outbreak.
Contributions from associate companies tumbled 81% to S$11.21mil for the quarter, with 49%-owned insurance associate Great Eastern Holdings suffering a sharp drop due to weak equity markets. – Reuters