SINGAPORE: Singapore's second-largest bank Oversea-Chinese Banking Corp, or OCBC, flagged a more cautious outlook for 2025 as margin pressures persisted, even as its third-quarter net profit beat market expectations.
"Looking ahead, the external environment remains complex, shaped by shifting policy dynamics and geopolitical tensions," said OCBC's Group CEO Helen Wong in a statement.
"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 added.
OCBC now expects net interest income to decline by a mid-to-high single-digit percentage in 2025, compared with a mid-single-digit drop in the second quarter, according to Wong's slides accompanying the results.
The bank narrowed its net interest margin, a key profitability gauge, forecast to around 1.90%, from a range of 1.90% to 1.95% earlier.
Other targets remain unchanged, including mid-single-digit loan growth, cost-to-income ratio in the low 40s and a 60% total dividend payout ratio for the full-year plus share buybacks, according to the slides.
OCBC's results rounded up a mixed third-quarter earnings season for Singapore banks, which have faced headwinds from moderating interest rates and an uncertain macroeconomic environment.
Larger peer DBS Group posted on Thursday better-than-expected third-quarter earnings, sending its shares to a record high, while smaller rival United Overseas Bank profit dropped after it booked hefty credit allowances.
Singaporean bank earnings also come on the heels of mixed results from global peers last week.
HSBC's third-quarter pre-tax profit fell 14% after a $1.4 billion litigation charge tied to the Bernard Madoff fraud, while Standard Chartered beat estimates with a 3% rise in profit, helped by record wealth income and strong markets activity.
OCBC, which is also Southeast Asia's second-largest lender by assets, said July-September net profit was S$1.98 billion ($1.53 billion) versus S$1.97 billion a year earlier. This beat the mean estimate of around S$1.81 billion polled by LSEG.
The performance was supported by higher non-interest income and lower allowances, it said.
OCBC, which counts Singapore, greater China, Indonesia and Malaysia among its key markets, said return on equity dropped to 13.4% in the third quarter from 14.1% in the same period of 2024.
Net interest margin dropped to 1.84% during the quarter from 2.18% a year earlier.
($1 = 1.2942 Singapore dollars) - Reuters
