Non-interest income (non-II) was a “standout” this quarter, say RHB’s analysts, growing by 24% q-o-q and 15% y-o-y to $1.57 billion.
The sequential non-II growth was broad-based amid stronger fees (18% higher q-o-q), insurance (38% higher q-o-q) and trading & securities net gains (26% higher q-o-q).
Within fees, wealth management fees jumped 35% q-o-q and 54% y-o-y. Net new money in 3QFY2025 was $12 billion, with growth across all segments and significantly above the typical $4 billion to $5 billion per quarter run rate, thanks to falling benchmark rates. The percentage of invested assets under management was elevated at 60%, notes RHB.
Meanwhile, within trading income, customer flow treasury income hit a record high in 3QFY2025.
Elsewhere, OCBC’s net interest margin (NIM) compressed 8 basis points (bps) q-o-q and 34 bps y-o-y, owing to lower benchmark rates, cushioned by lower funding cost.
About 80% of Singapore dollar loans and almost its entire Hong Kong dollar loans are on floating rates. Otherwise, loan growth was 1% q-o-q and 7% y-o-y, while current account and savings account (Casa) growth remained robust at 2% q-o-q and 15% y-o-y.
Costs were higher q-o-q, though 9MFY2025 cost-to-income ratio (CIR) of 39% is tracking better than the bank’s low-40% guidance, notes RHB.
See also: RHB keeps DBS at ‘buy’, UOB at ‘neutral’ after 3QFY2025 results, running counter to OCBC’s calls
OCBC fine-tuned its FY2025 NIM guidance to 1.9% from 1.9% to 1.95% to take into account the year-to-date decline and expectation for one more US Federal Funds Rate cut before end-2025.
This, however, would be cushioned by a refined credit cost guidance of 20 bps (from 20 bps to 25 bps previously).
Looking ahead, while management did not provide FY2026 guidance, the bank thinks it possible that economic growth could decelerate in the near term and the operating environment could stay volatile amid evolving trade policies and geopolitical landscape.
Still, OCBC is positive on the regional supply chain resilience, energy transition and digitalisation opportunities.
OCBC reaffirmed its 60% payout for FY2025 and together with a similar payout last year, this brings the total capital return dividends to an estimated $1.49 billion and concludes the dividend portion of the capital distribution plan.
However, investors will need to wait until the 4QFY2025 briefing — expected sometime in February 2026 — for fresh updates on further capital management plans.
Pending further updates at the next briefing, RHB assumes the FY2026 payout normalises.
Last week, RHB analysts issued reports staying put with their “buy” call on DBS Group Holdings and “neutral” call on United Overseas Bank (UOB), despite the former’s run-up to a record share price of $55.55 on Nov 6 following the release of its third-quarter results.
As at 9.41am, shares in OCBC are trading 9 cents higher, or 0.51% up, at $17.87. OCBC shares are up 7.5% year to date.
