SINGAPORE: Singapore's Oversea-Chinese Banking Corp Ltd and United Overseas Bank Ltd gave upbeat pictures of their growth prospects on Wednesday, after reporting strong quarterly profits and cutting exposure to the weak offshore support services sector.
Singapore banks are benefiting from an economy that clocked its fastest expansion in three years in 2017, spurring an increase in demand for loans as businesses grow and the property sector improves.
Southeast Asia's largest bank by assets, Singapore-based DBS Group Holdings Ltd, also reported a jump in quarterly profit last week and gave a robust outlook.
"Sentiments in the region have on the whole been lifted by strong economic indicators and improved business confidence, which have spurred renewed optimism in our key markets," said Samuel Tsien, the chief executive officer of OCBC.
The three Singaporean banks reported record profits for 2017, boosted by a rise in net interest income and broad-based growth in businesses such as wealth management and insurance.
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.
The No. 2 lender however said it took more provisions to cushion itself against its exposure to the offshore support services and vessels (OSV) industry, where it saw no noticeable improvement in charter rates.
"Given the continued weakness observed in the OSV sector of the oil and gas industry, we prudently made additional specific allowances to reflect the challenging operating conditions and the uncertain market outlook," Tsien said.
Singaporean banks have struggled with their exposure to the battered oil services industry, with about a dozen locally listed companies restructuring loans and bonds in a challenging market.
DBS had doubled its quarterly provisions to the oil and gas sector in the third quarter and said the worst was probably over.
On Wednesday, United Overseas Bank reported a 16 percent rise in October-December 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.
"With the improving outlook across the region, our customers are stepping up on their regional expansion plans and expect further growth in their personal wealth," CEO Wee Ee Cheong said.
Singapore's smallest listed lender said its specific allowance on loans and other assets surged 77 percent to S$781 million. - Reuters