Oversea-Chinese Banking Corporation (OCBC) has reported group net profit of $1.98 billion for the 3QFY2025 ended Sept 30, 0.2% higher y-o-y.
The steady y-o-y performance was supported by higher non-interest income, which grew by 15% y-o-y to $1.57 billion and lower allowances, which fell by 18% y-o-y to $139 million.
Non-interest income grew from broad-based fee, trading and insurance income growth.
Net interest income (NII) for the quarter fell by 9% y-o-y to $2.23 billion as net interest margin (NIM) contracted by 34 basis points (bps) to 1.84% amid a softening interest rate environment, but partly offset by an average asset growth of 9%.
Total income for the quarter also remained relatively steady at $3.796 billion, compared to $3.802 billion in the corresponding period the year before.
Operating expenses increased by 4% y-o-y to $1.52 billion with cost-to-income ratio (CIR) at 40%. Credit costs fell by 6 bps y-o-y to 16 bps on an annualised basis.
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During the quarter, customer loans rose by 7% y-o-y to $327 billion while customer deposits grew by 11% y-o-y to $411 billion.
Loans-to-deposits ratio was 78.6%, down from 81.6% in the 3QFY2024.
OCBC’s non-performing loan (NPL) ratio stood unchanged at 0.9%.
On an annualised basis, group earnings per share (EPS) stood at $1.72, down from $1.73 in the same period the year before, while group return on equity (ROE) fell by 0.7 percentage points y-o-y to 13.4%.
As at Sept 30, OCBC’s transitional common equity tier 1 (CET-1) ratio stood at 16.9%, 0.3 percentage points lower y-o-y. On a fully phased-in basis, the bank’s CET-1 ratio fell by 0.6 percentage points y-o-y to 15%.
On a q-o-q basis, group net profit was up by 9% driven by stronger non-interest income, cushioning the impact of a lower NII, which fell by 2% q-o-q. The higher average assets were more than offset by the lower NIM, which fell by 8 bps to 1.84%. The lower NIM was mainly due to a downward repricing of loans from the decline of the benchmark rates in the Singapore dollar (SGD) and other currencies.
Non-interest income rose by 24% q-o-q supported by broad-based growth across fee, trading and insurance income. Net fee income was up by 18% q-o-q as wealth management fees, loan- and trade-related fees, as well as fund management and brokerage fees rose q-o-q.
Net trading income was up by 38% q-o-q while customer flow treasury income rose by 29% q-o-q.
Insurance income increased by 38% q-o-q mainly due to improved investment performance of its insurance funds.
For the 9MFY2025, OCBC’s net profit fell by 4% y-o-y to $5.68 billion.
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“We delivered a strong set of third quarter results, which underscored the resilience of our diversified banking, wealth management and insurance franchise,” says outgoing group CEO Helen Wong, who will retire by the end of this year.
“Our solid performance this quarter was underpinned by continued growth in customer activities and wealth AUM (assets under management), which lifted fee and trading income. Insurance also delivered higher profit contribution.”
“Looking ahead, the external environment remains complex, shaped by shifting policy dynamics and geopolitical tensions. Our strong balance sheet and robust capital position provides us with flexibility to manage these risks, and enables us to support our customers and invest for future growth,” she adds.
Shares in OCBC closed 13 cents higher or 0.76% up at $17.19 on Nov 6.
