“It’s an exciting set of numbers, we’re happy. [It] reflects on the investments and commitments we have made in the past,” says group CEO Helen Wong at the bank’s results briefing on Nov 7.
Loans were up by 7% y-o-y to $327 billion on broad-based growth across the bank’s different geographies. The bank also gained market share on Singapore mortgages, says Wong.
The bank’s non-performing loan (NPL) ratio remained stable y-o-y and q-o-q at 0.9%.
However, new NPAs rose on a y-o-y and q-o-q basis to $349 million in the 3QFY2025, up from $285 million and $256 million respectively in the 3QFY2024 and 2QFY2025. 9MFY2025 new NPAs rose to $745 million from $610 million.
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In 3QFY2025, total income stood flattish y-o-y but was up by 7% q-o-q to $3.8 billion, driven by record non-interest income, which more than compensated for the decline in OCBC’s net interest income (NII). NII for the three months fell by 9% y-o-y and 2% y-o-y to $2.23 billion from declining benchmark rates.
Net interest margin (NIM) for the quarter fell to 1.84%, down from 2.18% in the 3QFY2024 and 1.92% in the 2QFY2025, driven by lower benchmark rates, especially average rates for the Singapore Overnight Rate Average (SORA) and the Hong Kong Interbank Offered Rate (HIBOR). The bank’s exit NIM as at the end of September stood at 1.84% as well.
The progressive reduction in funding costs and cash flow mitigated loan yields, says OCBC’s group CFO Goh Chin Yee.
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As at end of September, NIM sensitivity based on 100 basis points, the drop in rates across the bank’s four major currencies, the Singapore dollar (SGD), Hong Kong dollar (HKD), Malaysian ringgit (MYR) and the US dollar (USD), was about 11 bps on an annualised basis. Half of OCBC’s loan book is denominated in SGD and HKD. For these 80% of SGD loans and almost all of its HKD loans are either on floating rates or due for repricing within a year, she adds.
While the bank will continue to prioritise asset growth to support its NII, the bank cannot always rely on high interest rate cycles, notes Wong, adding that the crux, instead, is to remain focused on overall growth.
As interest rates remain on the decline, Wong acknowledged that the bank’s NIM will be pressured. As the bank looks at protecting its NII, the NIM is more akin to a “pointer” and not a “target” in that it will help it manage its funding costs and consider how it defends its loan margins.
“We cannot control how the interest rates will turn, but we can control and invest what we can do to bring in more volume to counter that loss,” says Wong. She adds that more volume can also include non-interest income as well.
Wealth management ‘important’
Wealth management has also been an important strategy for the bank. Group CEO Wong says the business is a “very important growth pillar” given that Asia has been getting more affluent.
In the 3QFY2025, the bank saw net new money inflows of $12 billion from its private bank, premier and premier private segments. The money, which is above the run-rate for the past two quarters’ $4 billion to $5 billion, came from various places.
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The number was attributed to a result of “some of the early work” that the bank did and the accelerated hiring of new relationship managers (RM) for the last two years.
That said, Wong says the figure should not be seen as the “new normal” as a lot depends on market conditions and the lowered interest rates because customers may be more active then.
Going into the 4QFY2025, which is traditionally a quieter quarter, Wong says market watchers shouldn’t assume that the $12 billion will be repeated.
When asked about balancing growth opportunities from ultra wealthy clients amid heightened scrutiny, Wong says it is not a balancing act and that the bank will have to adhere to the rules and regulations.
“We should be able to handle business in a fair manner. Meaning you serve your customers well but of course, you stick to your laws and regulations. Also, we [have to] uphold to higher standards, right? Because we’re responsible not just to regulators… but to our stakeholders as well. We defend our reputation, we defend our business franchise,” she adds.
2026 may see slower economic growth
While the bank has not provided any guidance for FY2026, next year may see “slower economic growth” across various countries and geographies, says Wong. Geopolitical tensions and shifting trade policies could affect demand on supply chains.
That said, the group CEO believes the bank’s fundamentals “remain resilient” and it is still positive on its mid- to long-term prospects.
Deputy CEO Tan Teck Long shares that the bank is monitoring two key factors.
The first is tariffs and the broader trade restrictions, given that the ripple effects have not been fully filtered throughout the economy.
That said, Tan still sees some bright spots in growing sectors such as digital infrastructure and domestic construction. “We see these sectors continuing to grow… Because of the trade tariffs, where materials come from, for example, a large manufacturing market like China, the input cost could be lower for some of these corporates in these industries.”
The second big factor is interest rates, which help in that wealth customers will relook at onboarding risk in their investments. These will also affect corporates when it comes to evaluating their hurdle rates for their investments.
Having said that, Tan notes that the overall tone for investments remains cautious.
Analysts keep ‘neutral’ call
Analysts from Citi Research and JP Morgan have maintained their “neutral” calls despite OCBC’s results surpassing expectations.
To Citi analyst Tan Yong Hong, the bank displayed a “solid set of results” with robust wealth management momentum and higher growth in deposits above its peers.
Investors who were disappointed with United Overseas Bank’s (UOB) results could rotate into OCBC for a value play, Tan adds.
On Nov 6, UOB reported a 72% y-o-y drop in net profit to $443 million in the 3QFY2025 ended Sept 30, after making a pre-emptive move to shore up its general provisions by $615 million.
JP Morgan noted OCBC’s “good” results, but said it was not enough to “take a meaningful performance lead” despite lower valuations compared to DBS’s.
“A shift in payout at OCBC, and guidance for steady cash DPS (dividend per share), accompanied by specials as well as buyback can be a potential catalyst, as the new CEO takes helm,” says JP Morgan.
Rena Kwok from Bloomberg Intelligence estimates that OCBC’s wealth business is poised to drive revenue generation into 2026, which will help limit a profit decline to about mid-single digits.
OCBC’s margins are also poised to narrow further in 2026 with the likelihood of three more rate cuts from the Fed. That said, the bank could see a short-term recovery in the 4QFY2025 as the effect of the HIBOR’s rebound is felt.
“Loan growth, outpacing peers for a fourth straight quarter, can remain healthy as the bank leverages energy-transition and digital opportunities,” says Kwok.
For 2025, OCBC will stick to its commitment to deliver 60% of its dividend payout ratio. The bank will also complete its share buyback plans by the end of 2026.
