OCBC posts 3% profit increase as wealth clients favor defensive products
OCBC's third-quarter net profit rose 3% to S$2.04 billion, helped by record customer flow trading income as clients moved toward lower-risk investments amid market volatility.
OCBC reported a 3% rise in third-quarter net profit to S$2.04 billion, driven by stronger banking operations, higher wealth-management fees and record customer flow trading income. The bank said client activity shifted toward lower-risk or defensive investment products as market volatility increased.
“We saw volatility in the financial markets, so customers gravitated towards low-risk product or products with a defensive nature, and we continue to capture that... under our customer flow trading income,” group CEO Tan Teck Long said at the results briefing.
Customer flow trading income, which reflects fees from facilitating client trades, jumped 29% to a record S$480 million, supported by both wealth and corporate segments. Wealth fees rose 3% to S$442 million, the second-highest quarterly total on record.
Non-interest income fell 10% to S$1.42 billion, mainly due to weaker insurance earnings from Great Eastern, which recorded mark-to-market losses on its shareholders’ fund bond portfolio as interest rates rose. CFO Goh Chin Yee noted that the losses do not reflect the underlying strength of the insurance business, adding that new business embedded value grew 14% year-on-year to S$208 million.
Net interest income increased 4% to S$2.31 billion, while loans grew 14% to S$372 billion, driven by corporate and consumer lending. The net interest margin slipped 18 basis points to 1.66% amid a lower-rate environment. The bank’s non-performing loan ratio improved to 0.8% from 0.9% a year earlier.
OCBC raised its 2026 guidance, now expecting low double-digit loan growth and total income expansion of at least a mid-single-digit percentage. Credit costs are projected at 15–20 basis points, and the net interest margin is expected to stabilise as rates remain higher. The bank plans to revert to a 50% dividend payout ratio after completing its capital return programme, with absolute dividends anticipated to rise.
Tan highlighted growth opportunities in the bank’s four key markets—Singapore, Hong Kong, Malaysia and Indonesia—citing Malaysia’s role in global supply chains and Indonesia’s demand for natural resources and data-centre infrastructure. He also emphasized a prudent credit approach to AI-related financing, focusing on cash-flow-backed projects.
OCBC shares were marginally lower at S$27.79 during midday trading on Friday.