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This brings the FY2023 dividend to 82 cents per share, up 21% from 68 cents a year ago and represents a payout ratio of 53%.
Oversea-Chinese Banking Corporation (OCBC) has reported record net profit of $7.02 billion for FY2023 ended Dec 31, 2023, up 27% y-o-y and crossing $7 billion for the first time.
Net profit from banking operations rose 27% y-o-y to $6.39 billion.
For 4QFY2023, OCBC’s Group net profit rose 12% y-o-y to $1.62 billion, driven by a 2% increase in operating profit and lower allowances.
Total income for FY2023 rose to a new high of $13.5 billion, with net interest income at a record high of $9.65 billion, up 25% y-o-y; and net interest margin (NIM) rose 37 basis points (bps) to 2.28%.
Meanwhile, non-interest income rose 7% y-o-y to $3.86 billion. Management attributed this to improved trading income and investment gains.
Operating expenses rose 8% y-o-y to $5.22 billion during the year, while credit costs rose 4bps to 20bps.
OCBC’s FY2023 cost-to-income ratio improved to 38.7% from 42.9% in the prior year, while the non-performing loan (NPL) ratio of 1.0% is 0.2 percentage points lower from the previous year.
Total allowances were $733 million, up 25% from $584 million in the previous year.
Customer loans rose 2% in constant currency terms to $297 billion, while customer deposits rose 4% to $364 billion over the year.
Loan-related and credit card fees rose, but overall fee income was down as subdued investment sentiments continued to weigh on wealth-related fees, says OCBC on Feb 28. FY2023 net fee income of $1.80 billion is 3% lower y-o-y.
The Group’s return on equity (ROE) for FY2023 improved to 13.7%, from 11.1% a year ago. Earnings per share (EPS) was 27% higher at $1.55, compared to $1.22 in the previous year.
OCBC’s common equity tier-1 (CET-1) capital adequacy ratio (CAR) rose 0.7% ppt y-o-y to 15.9%.
OCBC’s Board has recommended an increase in the final dividend to 42 cents per share from 40 cents a year ago. This brings the FY2023 dividend to 82 cents per share, up 21% from 68 cents a year ago and represents a payout ratio of 53% of the Group’s FY2023 net profit.
Insurance and wealth management
OCBC’s FY2023 insurance income was $808 million as compared to $803 million a year ago.
Great Eastern Holdings (GEH) adopted Singapore Financial Reporting Standards (International) 17, or SFRS(I) 17, on Jan 1, and the Group’s insurance results for FY2023 are prepared based on SFRS(I) 17 and respective comparative periods for FY2022 have been restated.
Total weighted new sales and new business embedded value (NBEV) were $1.66 billion and $762 million respectively, while NBEV margin was higher at 45.9%.