SINGAPORE — OCBC will not be affected by China’s credit quality issues that are rippling through the trade finance sector there, as the bank continues to build its presence in Greater China following the successful acquisition of Wing Hang Bank in Hong Kong, said chief executive Samuel Tsien.

Mr Tsien noted that only a small portion of its loans to Greater China were actually booked in China or related to trade financing.

“Our Greater China exposure amounted to S$27 billion in the second quarter … Of that, only S$3.7 billion was booked in China and S$15 billion was booked overseas, primarily Singapore,” Mr Tsien said at the bank’s second-quarter results briefing yesterday. “This is because we have an onshore/offshore strategy for China, where we have some domestic links, but most of our transactions are offshore.”

The comments came after growing concerns that OCBC and other foreign banks active in China may be hit by bad trade loans following the Qingdao Port fraud in June, when metal shipments were blocked by the port authorities over allegedly fraudulent use of receipts to raise credit. But OCBC is not involved in the incident, Mr Tsien said.

“Out of the S$27 billion, S$8 billion is trade-related. Our target market in China focuses on large corporates and state-owned enterprises … So our portfolio in China, and the potential risks arising from China, is not representative of (issues faced by the) Chinese economy,” he added. “Our non-performing loan ratio for China-booked loans is 0.3 per cent, significantly lower than the 0.7 per cent the group reported.”

Meanwhile, OCBC delivered another set of strong earnings in the second quarter, when net profit of core banking operations rose 21 per cent to reach S$720 million. This was supported by an 18 per cent jump in net interest income to S$1.1 billion, while net interest margin remained stable at 1.7 per cent.

Non-interest income grew 6 per cent on-year to S$548 million, on the back of higher wealth management and trading income.

With a S$202 million contribution from subsidiary Great Eastern due partly to better mark-to-market gains, OCBC’s total group net profit for the quarter rose 54 per cent to a record S$921 million.

OCBC — the second-largest bank in South-east Asia by assets — will continue to focus on developing its presence in Malaysia and Indonesia. The bank’s expansion plans for Greater China received a boost after it obtained a 97.5 per cent interest in Wing Hang Bank and appointed Mr Na Wu Beng as the new chief executive of the Hong Kong lender last week.

“With the addition of Wing Hang, we’re excited not only about the new in-market synergistic opportunities, but also the significant cross-border business arising from the growing regional trade, investment, capital and wealth flows between Greater China and South-east Asia,” Mr Tsien said.