Singapore-listed OCBC bank delivered upbeat Q3 earnings results this morning, with its quarterly profits surging 12% to reach S$1.06 billion.

The strong performance was mainly driven by favourable returns in its banking, wealth management and insurance businesses. The non-performing loan ratio remains stable at 1.3%, though ongoing geopolitical risks and continuing stress in the oil and gas industry must be watched carefully. 

The STI is currently facing some selling pressure at the 3,350 area, the previous high of the July-to-August period. Strong Q3 earnings results are needed to give the STI a push to break through this resistance. 

FX and equity traders are embracing the important ECB meeting tonight at 7.45pm Singapore time. According to Thomson Reuters’ forecast, the market expects no change in the central bank’s interest rate but anticipates some clarity on the future tapering plan. The ECB currently makes monthly purchases of 60 billion euros, down from the previous level of 80 billion euros in March this year. UBS analysts expect further cuts to the asset-purchasing amount with a commitment to extend the purchasing program for nine months, through next year. 

EUR/USD extended gains ahead of the ECB meetings, climbing to a four-day high in the 1.183 area. Hawkish comments or measurements, if any, will probably spark a new wave of rallies in the euro after nearly a month of consolidation. 

Separately, GBP/USD surged over 100 pips yesterday evening due to upbeat UK GDP readings, which increased the odds of an interest rate hike in next month’s meeting. 

Singapore Q3 earnings update:

SGX:

  • Q1 2018 revenue at S$204m, up 7% year on year
  • Net profit at S$91m, up 9% year on year
  • EPS 8.5 cents, in line with expectations
  • Strong growth was observed in key foreign exchange (FX) future contracts and fixed income businesses
  • Derivatives revenue rose 14% to reach S$80.6m, contributing to 39% of total revenue

OCBC:

  • Q3 net profit jumped 12% to S$1.06b, beating the consensus of S$974m
  • Net Interest Income rose 12% to S$1.38b, Net Interest Margin (NIM) improved by 4bps to 1.66%
  • Non-interest income grew 1% to S$978m, mainly due to higher fees income from wealth-management businesses
  • Profit from life insurance surged 23% to S$201m because Great Eastern Holding’s investment portfolio achieved favourable returns
  • The non-performing loan (NPL) ratio remained stable at 1.3%

Technical Analysis:

EUR/USD

  • The 10-Day Simple Moving Average shows no clear direction
  • SuperTrend (10,2) remains in a bearish set up. The price needs to break through the 1.187 level before the SuperTrend can flip into a bullish set up
  • Immediate support and resistance levels at 1.172 and 1.187 respectively

 
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