OCBC Q2 profit falls 40%, hurt by loan-loss provisions
SINGAPORE - Singapore's second-largest lender Oversea-Chinese Banking Corp reported a larger-than-expected 40 per cent fall in second-quarter net profit on Friday , as provisions for loan losses soared and lending income shrank during the Covid-19 pandemic.
Net income dropped to $730 million in the three months ended June 30 from $1.2 billion in the year-ago quarter. That missed the $930 million average estimate of eight analysts surveyed by Bloomberg. OCBC joins its two local rivals in reporting another profit contraction as they build hefty buffers before the expiry of government relief measures leaves businesses more vulnerable to Singapore's worst recession.
"Much uncertainty persists on both the economic front and human cost arising from the pandemic," chief executive officer Samuel Tsien said in a presentation, noting the need to prepare for factors including the withdrawal of government relief. OCBC's provisions for credit losses swelled to $750 million in the second quarter from $111 million a year earlier.The board declared a dividend of 15.9 cents per share for the first half of 2020, with the scrip dividend scheme applicable. Shareholders have the option to receive the dividend in the form of shares, with the issue price of the shares set at a 10 per cent discount.
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