SINGAPORE (May 7): Oversea-Chinese Banking Corporation reported a earnings of $1.11 billion for 1Q18 ended March, an increase of 29% from a year ago on lower loan provisions and higher income from lending and wealth management.

This was slightly higher than the mean of five broker estimates of $1.09 billion compiled by Thomson Reuters.

Last week, DBS posted a 26% increase in earnings while UOB&rsquo s earnings rose 21%.

OCBC Bank says the robust year-on-year performance was underpinned by strong net interest income growth, higher wealth management income, lower allowances and higher contributions from the group&rsquo s overseas banking subsidiaries.

Net interest income for the first quarter grew 11% to $1.42 billion from $1.27 billion a year ago, underscored by strong asset growth and increased net interest margin.

Net interest margin rose 5 basis points to 1.67% from 1.62% a year ago. Non-interest income was 8% higher at $918 million as compared to $850 million a year ago.

The group&rsquo s overall wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, grew 22% to $727 million, from $597 million a year ago.

Bank of Singapore&rsquo s assets under management increased 19% to US$102 billion ($133 billion) as at March 31 2018, from US$85 billion ($119 billion) of the previous year.

As a proportion of the group&rsquo s total income, wealth management income which included income from insurance operations, contributed 31%, up from 28% a year ago.

Total allowances for loans and other assets for 1Q18 were $12 million, significantly lower as compared to $178 million in the preceding quarter and $168 million a year ago, as the prior periods included allowances set aside for corporate accounts in the offshore support services and vessels sector.

As at March 31, total non-performing assets of $3.45 billion were slightly below $3.47 billion of the quarter before. The non-performing loans ratio fell to 1.4% from 1.5% as at Dec 31 2017.

Based on Basel III rules which came into full effect on Jan 1, the group&rsquo s Common Equity Tier 1 capital adequacy ratio (CAR), Tier 1 CAR and Total CAR as at March 31, were 13.1%, 14.2% and 15.8% respectively and well above the respective regulatory minimums.

In its outlook, CEO Samuel Tsien says business sentiments have been positive, but the bank remains vigilant to geo-political events including increased global trade tensions and the effects of higher interest rates on investment activities and the overall economy.

Lim & Tan says OCBC was the only Singapore bank that met expectations, while DBS and UOB both beat consensus expectations by about 5% for 1Q18.

Looking ahead, Lim & Tan expects OCBC&rsquo s earnings to grow 17% in 2018 to $4.8 billion while UOB is expected to grow 22% to $4 billion and DBS the fastest at 35% to $5.9 billion.

In PE terms, UOB and OCBC are trading around 12.3 times while DBS is trading at 12.6 times, according to Lim & Tan. Price to book, UOB is the most attractive at 1.4 times against DBS and OCBC&rsquo s 1.5 times.

Dividend-yield wise, Lim says DBS is the best at 4.1% against OCBC and UOB&rsquo s 2.8%.

&ldquo Our banking sector preference remains DBS, UOB followed by OCBC,&rdquo says Lim & Tan.

As at 2.18pm, shares in OCBC are trading 39 cents lower at $13.26.