That said, RHB thinks investors will likely be looking ahead for clues as to how management sees 2026 shaping up. OCBC group CEO Helen Wong will retire on Dec 31; she will be succeeded by deputy CEO and head of global wholesale banking Tan Teck Long.
RHB analysts have kept their $17.50 target price on OCBC despite the expectations for a softer full-year patmi as the bank’s 5.7% yield “remains decent”.
Uncertainties linger
RHB recently met with OCBC’s management, which noted lingering uncertainty and cautiousness exhibited by customers due to the US tariff situation.
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This has dampened near-term loan growth. That said, OCBC thinks customers planning to invest for the long term will likely continue with their plans, “albeit just a matter of timing”.
For example, OCBC continues to see interest from Chinese companies looking to invest in Malaysia. It has also seen firms looking to invest in Indonesia’s electric vehicle (EV) supply chain.
OCBC management also highlighted that it has been involved in loan syndication for some of the global multinationals in key financial centres abroad, according to RHB.
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Domestically, mortgage has also been a bright spark, thanks to the sharp decline in Singapore’s benchmark rate.
Healthy deposits
RHB notes that OCBC’s deposit inflows remain healthy, “which should translate into balance sheet growth”.
“The ongoing repricing of fixed deposit, plus the two earlier rounds of repricing for OCBC’s flagship product in May and August, should be felt more meaningfully in 3QFY2025 and help cushion the impact from the continuing benchmark rate decline,” they add.
While there was no update to OCBC’s net interest margin (NIM) guidance, OCBC continued to guide for mid-single-digit NII declines in FY2025.
RHB forecasts NII falling 6% y-o-y this year on the back of a 26 basis point (bp) NIM slippage, cushioned by 5% y-o-y total assets growth.
Good quarter for wealth fees
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Meanwhile, RHB thinks OCBC’s wealth business “looks to have had a good 3QFY2025” thanks to inflows and better investor sentiment and risk appetites. This was positive for client transactions.
Trading income, however, is harder to predict and could impact OCBC’s q-o-q patmi growth.
“Also, while OCBC has not noted any major red flags on asset quality, credit cost is coming off a low base in 2QFY2025,” note analysts.
Weaker 2HFY2025
Overall, RHB expects Singapore banks to book weaker 2HFY2025 earnings compared to the former half of the year, owing to a combination of seasonal factors and the US tariff policies.
“That said, we think investor focus will likely be on the outlook for 2026. With OCBC expected to complete its capital return dividends in FY2025, investors may turn their attention to management’s plan for the capital set aside earlier for the privatisation exercise of Great Eastern Holdings,” says RHB.
If the delisting had gone through, management had previously guided the impact to trim Common Equity Tier-1 (CET-1) ratio by 40bps.
RHB had started the year with a $19.10 target price on OCBC and a “buy” call on Feb 27, but later cut this to “neutral” and the current $17.50 fair value estimate on April 21.
As at 11.48am, shares in OCBC are trading 11 cents higher, or 0.67% up, at $16.84.
