SINGAPORE - Singapore banks warned Thursday of tougher times ahead after reporting mixed results for the second quarter as economic growth slowed and financial markets struggled.
Net profits in the June quarter rose at Southeast Asia's largest lender DBS Group and at United Overseas Bank (UOB), but fell at Oversea-Chinese Banking Corp (OCBC).
DBS said it had made a profit of S$652 million in the three months to June, up 16 per cent year-on-year, but chief executive Richard Stanley said it would remain vigilant.
"We will continue to be watchful and vigilant in the months ahead as the operating environment becomes increasingly challenging," he said.
Analyst David Lum from Daiwa said the only blip on DBS second-quarter results was the fall in net interest margins, a key measure of bank profitability.
"DBS was the only one of the three Singapore banks to report a decline in net interest margins," said Lum, referring to the trio that put out figures this week. "That was probably the only disappointing aspect of its results."
OCBC, the smallest of the three banks, said Thursday its net profit sank 20 per cent to S$425 million because of weaker contributions from its insurance arm Great Eastern Holdings and its brokerage business.
Great Eastern Holdings contributed S$3.0 million to OCBC net profits in the June quarter, down sharply from S$116 million the year before, while brokerage income fell 47 per cent to S$19 million.
"Our first half performance was affected by the volatile markets impacting Great Eastern's results and the bank's trading income," said OCBC chief executive David Conner.
"While we are on alert due to possible further weakening of the global economy, we will continue to strengthen our presence in our primary markets."
UOB, which released its earnings on Tuesday, reported a 2.7 per cent rise in net profit to S$601 million.
The bank also sees a more challenging environment as financial institutions adjust to slower growth and inflation concerns.
"The past six months have been challenging and it's not going to be any easier as global institutions seek ways to rebuild their balance sheet and economies cope with slowdown and inflation," said UOB deputy chairman Wee Ee Cheong.
"We are mindful of the risks amidst these challenges and will remain prudent and disciplined in managing our business."