OCBC Reports Modest Gains On FY11 Earnings
The Overseas-Chinese Banking Corporation (OCBC) reported an improved full year performance that was underpinned by robust growth in its customer-related businesses. For FY11, earnings grew 3 percent to $2.3 billion while core profit, (which excludes gains from divestment of non-core assets) grew marginally by 1 percent to $2.2 billion. The bank’s bottom line performance was boosted by record net interest income and fee income, as well as healthy growth in insurance new business weighted premiums and new business embedded value. Net interest income soared 16 percent to $3.4 billion as loan growth swelled 27 percent. However the growth was partially offset by decreasing margins in light of the low interest rate environment and strong growth in lower-risk loans. The chief dampener in OCBC’s results came from financial market volatility as both trading income as well as investment performance of the non-participating fund fell 46 percent and 44 percent respectively. The bank has proposed a final dividend of $0.15 per share, bringing total dividend for FY11 to $0.30, unchanged from FY10.
Significance: OCBC remains relatively strong in the face of economic troubles abroad. Its broad based growth in traditional banking bodes well as it continues to invest in its regional network and leverage on synergies across its subsidiaries to better serve its customers.
SingTel’s Optus To Acquire Vividwireless
SingTel’s Australian subsidiary, Optus has announced that it intends to acquire Vividwireless Group from Seven Group Holdings, for A$230 million ($310.7 million). Through the acquisition, Optus is expected to gain access to high speed bands that are currently used by some of the world’s leading operators to provide 4G services. The high speed bands will be used to build a new 4G network using the LTE-TDD technology that will deliver wireless broadband to households and businesses in metropolitan Australia with typical download speeds of 25 Mbps to 87 Mbps, about twice as fast as existing competitive 4G services. Optus says that this new service will be integrated with its own 1800 MHz 4G network, which will be launched in April-12.
Significance: The acquisition of Vividwireless will provide Optus a significant increase in its network capacity to address the next wave of data growth with the introduction of 4G services. The increased speeds of its 4G network is expected to give Optus a competitive boost ahead of its domestic rivals.
Tiong Seng Registers Bumper Growth In Revenue
Tiong Seng Holdings, a local construction and property developer, announced that its revenue soared 64 percent year-on-year to $414.5 million in FY11 as all business segments grew. The main contributor to its revenue growth, the construction contracts division, grew some 55 percent to $250.7 million while other segments saw robust growth to underpin Tiong Seng’s top line performance. Excluding the net effect of a one-time gain on bargain purchase in 3Q10, FY11 profit would have grown 26.3 percent to $27.2 million. The firm’s project pipeline remains strong with an order book of approximately $1.4 billion, comprising of construction and civil engineering projects. The secured contracts, of which majority are expected to be fulfilled over the next 12 to 30 months, provides some earnings visibility in FY12.
Significance: Moving forward, the firm’s growth is expected to moderate in the face of higher construction and material costs, increased foreign worker levies, a tighter labour market as well as stiff competition from large foreign competitors.