The Chinese cross-border regulatory developments have had a limited impact so far, the Goldman Sachs report says. China's State Council Order No. 837 which is effective from July 1, significantly tightens oversight of outbound investments, explicitly including high-net-worth individuals. It has broadened the definition of “outbound investment”, subjects individuals to national security reviews, and imposes penalties for opaque or non-compliant wealth-transfer structures.
Goldman Sachs was told that most Chinese client assets are sourced offshore, and OCBC’s exposure to onshore Hong Kong flows remains relatively small, which helps mitigate near-term disruption. “While some moderation could be seen in June as policies are digested, the broader wealth growth trajectory remains intact, supported by ongoing investment in propositions and cross-jurisdiction capabilities,” the Goldman Sachs update, dated June 18, says.
According to the update, OCBC’s net interest income for the full year is expected to decline y-o-y reflecting lower average rates as net interest margin (NIM) continues to be driven primarily by Sora.
“Asset quality remains stable, with no signs of deterioration observed across the portfolio. Current provisioning buffers are viewed as adequate based on internal stress testing, and OCBC does not see a need for additional provisions at this stage. Exposure to Indonesia has been managed more conservatively, with limited growth and continued focus on risk control,” the Goldman Sachs report says.
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Just to recap, in FY2025, OCBC had the lowest specific allowances among the local banks. DBS’s specific allowances amounted to $854 million or 19 basis points of loans in FY2025; UOB’s was $1,139 million or 33 bps of loans while OCBC’s specific allowances in FY2025 stood at $535 million or just 14 bps of loans.
GEH’s 1Q2026 results were supported by one-off items related to “release in reserve”. To take a step back, insurance reserves are funds set aside to cover expected future claims and policyholder obligations. Over time, if actual claims turn out lower than expected, or if assumptions about risk improve (e.g., mortality rates, lapse rates, investment returns), the insurer may decide it doesn’t need to hold as much in reserve. A “release in reserve” happens when the company reduces those reserves, freeing up capital that had been locked away. That release flows into the income statement as a boost to profits, because less money is being held back for future liabilities. The profit uplift is non recurring as it is not from new business growth or higher premiums, but from accounting adjustments.
“OCBC indicated that while such items are not expected to repeat, the underlying trajectory remains positive, with structural growth supported by improved product positioning and continued integration within the broader wealth platform,” Goldman Sachs says.
Goldman Sachs retains a buy recommendation with a 12-month price target of $25.30 and is forecasting a mild decline in OCBC’s earnings per share for FY2026.
