Bank earnings off to 'positive start' in this financial hub

Key Points
  • Singapore banks kicked off earnings season with OCBC reporting a 22 percent year-on-year jump in second quarter net profits
  • The better-than-expected performance was boosted by its wealth management and insurance businesses
  • OCBC shares traded up after earnings announcement
OCBC Centre in Singapore's central business district
Yen Nee Lee | CNBC

Banking stocks in one of the world's top financial hubs rallied on Thursday after its second-largest lender reported quarterly earnings that handily beat estimates.

Singapore's Oversea-Chinese Banking Corp (OCBC), kicking off results season for the city state's banks, said in a statement its second-quarter net profit jumped 22 percent year-on-year to 1.08 billion Singapore dollars ($796 million) — the highest in almost three years.

A Reuters poll had expected the bank to register a net profit of 988 million Singapore dollars.

OCBC shares gained 1.6 percent by 9:45am HK/SIN. Its larger rival, DBS Group Holdings, inched up by 0.9 percent, while United Overseas Bank (UOB) was up 0.2 percent.

The three banking groups account for almost one-third of the Southeast Asian city state's benchmark Straits Times Index, which has outperformed many of its regional peers this year after climbing some 15 percent.

"OCBC had arguably been expected to be the best performer amongst the trio of banks, so while the positive Q2 results may bring about a boost for the domestic banking sector, UOB and DBS results remain ones to closely follow," IG market strategist Jingyi Pan wrote in a note.

OCBC's earnings were boosted by its wealth management and insurance business, partly helped by its acquisition of Barclays' Asia wealth unit last year.

UOB is scheduled to release its second quarter earnings on Friday, while DBS is expected to follow suit on August 4.

— Reuters contributed to this report.