OCBC

OCBC: OCBC 3Q15 core net profit of $902m (+7% y/y, -14% q/q) came above street estimates, forming 78% of street's FY15 forecast.

Net interest income rose to $1.32b (+6% y/y, +3% q/q) from a 4% rise in customer loans, although NIM narrowed to 1.66% (3Q14: 1.68%, 2Q15: 1.67%), as improved customer loan spreads in Singapore were more than offset by a lower loan-to-deposit ratio and a decline in money market gapping income.

Non-interest income came in lower at $775m (-3% y/y, -17% q/q), dragged by weaker life insurance income, but partially offset by banking operations which stemmed from treasury-related income from customer flows.

Operating expenses were 3% higher from higher staff costs related to headcount growth to support its regional business expansion. As such, cost-to-income ratio rose to 43.0% (2Q15: 41.3% 3Q14: 42.5%).

Asset quality deteriorated, with NPL ratio of 0.9% (3Q14: 0.7%, 2Q15: 0.7%) largely attributed to the classification of a few large corporate accounts associated with the O&G services sector, while loan-loss coverage was 121%.

Capital position remained healthy, with fully-loaded CET1 CAR of 14.5% (3Q14: 13.2%, 2Q15: 14.1%).

Core ROE at 11.2% trended down (2Q15: 13.4%, 3Q14: 13.1%), largely attributed to the enlarged shareholder base following the rights issue in Sep '14.

At the current price, OCBC trades at 1.18x P/B, compared to UOB (1.14x) and DBS (1.12x).

Results for the latter two banks are due on Friday and the following Monday pre-market, respectively.