OCBC's FY14 net profit ballooned 39% to S$3.8b

But it was still below expectations.

The OCBC Group has reported FY14 net profit of S$3,842m, which is up 39% y/y and 1-2% below Barclays/Bloomberg estimates.

According to a research note from Barclays, further, OCBC's 4Q14 net profit of S$791m, -36% q/q and 11% y/y, was 11% below Barclays/consensus Bloomberg estimates.

The report noted that this was mainly due to lower than expected net interest margin, market-related fee income as well as higher than expected credit cost from general provisioning which rose to 30bps (compared with 20bps in 3Q).

Here's more from Barclays:

Net interest margin contracted by 1bps q/q to 1.67% (vs 3bp expansion at DBS) due to slightly higher funding cost. Net interest income rose by 2% q/q driven by loan growth of 2% q/q, led by non-trade corporate loans and loans in Greater China and Indonesia. General commerce loans declined by 2.3% q/q which we believe is driven by a slowdown in trade finance and China-related currency arbitrage lending.

Fee income fell 6% q/q, led by lower investment banking, wealth management as market sentiment was weaker in 4Q. Life assurance profits and mark-to-market gains in Great Eastern Holdings (GEH)’s Non Participating Fund was largely stable (life insurance subsidiary). Lower trading gains q/q was offset by higher gain on investment securities and disposals.

Asset quality remains strong with NPL ratio falling to 0.61% (from 0.65% in 3Q), although credit cost rose to 30bps (vs 20bps in 3Q) from higher general provisioning.

Slightly lower dividend payout ratio: Fully loaded core Tier 1 was 10.6% (vs. 10.1% in 3Q) and a dividend of S$0.36/share was declared for the full year. Payout ratio of 39% in FY14 was lower than the 42% in 2013 and 40% in 2012.