Don't be fooled by OCBC's 2Q12 results, warns analyst

OCBC posted overheads growth of 6% qoq on higher staff costs.

Here's more from CIMB:

2Q12 profits (S$648m) came in above our (S$580m) and consensus forecasts (S$616m), mostly on lower-than-expected loan provisions. Pre-provision operating profit (PPOP) was slightly below our estimate as revenue was in line and overheads rose higher than forecast.

Negatives: margins, trading and overheads
The key negative was a whopping 9bp margin decline (to 1.77%). We think the other two banks will show similar falls but more muted, we hope. Margins dipped on increased liquidity as monies sought safe havens. OCBC’s 2Q loans were +2.8% qoq, customer deposits +1.8% but deposits from banks were +9.3%. Other negatives: 1) overheads growth (+6% qoq) on higher staff costs, and 2) less trading than expected.

Although above estimates, it was mostly from low provisions and we do not deem it impressive.

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