Just like the other two banks, OCBC’s net profit was impacted by increased allowances for potential bad debts.
The group provided a sobering assessment of the current situation and what it expects in subsequent quarters.Group’s results dragged down by insuranceThe bank reported a healthy 6% year on year rise in net interest income to S$1.63 billion. OCBC increased its overall allowances for both impaired and non-impaired assets to S$657 million, almost triple the allowances it booked of S$249 million in the first quarter of 2019.However, investors should note that it was OCBC’s insurance division, under Great Eastern Holding , that dragged down the overall group.Diversified loan bookOCBC has a diversified loan book that spans across geographies.
Credit costs expected to exceed that of the Great RecessionCumulative credit costs for the bank are estimated at 1% to 1.3% over the next two years.