Oversea-Chinese Banking Corp’s (OCBC) 1QFY2026 net profit of $1.974 billion came in around 5% above Bloomberg’s consensus estimate of $1.878 billion, up 13% q-o-q and 5% y-o-y.
The net profit growth, if sustained in 2QFY2026, will translate to higher dividends in the first half, hopefully. OCBC’s was the best beat, followed by United Overseas Bank, with DBS coming up in the rear.
Loans grew by 9% y-o-y to $374 billion, and deposits rose 10% y-o-y to $444 billion. Q-o-q, net interest income of $2.22 billion fell 3% largely due to lower benchmark rates for SGD, HKD and USD, and the effect of a comparatively shorter quarter. On a day-adjusted basis, net interest income was a notch lower by 1%.
The impact of lower interest rates was partly compensated by a decline in deposit costs and a 4% growth in average assets, driven by 3% average loan growth and a 7% rise in high-quality assets.
Net interest margin (NIM) was 10 basis points lower at 1.76%, which reflected loan yield compression and growth in income-accretive high-quality assets. Non-interest income was 22% higher q-o-q at $1.61 billion, driven by double-digit growth across fee, trading and insurance income.
OCBC’s wealth management income, comprising income from private banking, premier private client, premier banking, insurance, asset management and stockbroking, was $1.48 billion, up 11% y-o-y and contributed 39% to the Group’s total income, higher as compared to 37% in the previous year. Banking wealth management AUM was $342 billion, up 12% y-o-y, driven by net new money inflows across all wealth segments.
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OCBC’s total income rose by 5% y-o-y and and 6% q-o-q to a new high. Operating expenses fell y-o-y, with cost-to-income ratio (CIR) below 40%. Asset quality remained sound with non-performing loan (NPL) ratio steady at 0.9%.
Given the heightened risks in the macroeconomic environment, the Group set aside $191 million of allowances for non-impaired assets. Allowances for impaired assets of $25 million were substantially lower than 4Q2025 and the previous year. The allowances for non-impaired assets included additional management overlays set aside to reflect elevated uncertainties in the operating environment. Total credit costs for 1Q2026 were 23 basis points on an annualised basis. Total allowance coverage for non-performing assets (NPAs) increased to 163%. New NPA formation fell q-o-q to $123 million.
Fully loaded CET1 CAR stood at 15.2% as at March 31. The acquisition of HSBC’s International Wealth and Premier Bank Indonesia will shave a few basis points off CET1.
In a release, OCBC says the Group’s capital, funding and liquidity profile remained strong, positioning the Group well to pursue growth and navigate uncertainties.
