SINGAPORE: Singapore’s Oversea-Chinese Banking Corp posted stronger-than-expected third-quarter profit on Friday but warned of margin pressure ahead, as group CEO Helen Wong gave her final briefing before retiring at year’s end.
Singapore and Southeast Asia’s second-biggest bank by assets said July-September net profit rose to S$1.98 billion ($1.53 billion) from S$1.97 billion in the same quarter last year.
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, OCBC said.
“It is our strongest quarter this year and the second highest on record,” Wong told a press conference.
“We achieved this despite a declining interest-rate environment.”
Non-interest income jumped 24% on quarter to a record, driven by fees, trading and insurance. Wealth management delivered record fees, with net new money of S$12 billion.
But net interest margin, a key profitability gauge, dropped to 1.84% from 2.18% a year earlier and the bank narrowed its full-year guidance to around 1.90%, from a range of 1.90% to 1.95% projected earlier.
OCBC forecast net interest income will decline by a mid-to-high single-digit percentage in 2025, compared with a mid-single-digit drop in the second quarter, Wong said.
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.
The bank’s shares rose 2.9% to S$17.68, off the day’s record high of S$17.94.
The domestic benchmark index was flat. Wong, who became CEO in 2021, will retire on December 31, with Deputy CEO Tan Teck Long taking over on January 1.
“It’s been a very fruitful and wonderful six years in Singapore with a bank that I started with and ended my career with,” said Wong, who was the first woman to head a Singapore bank at the time of her appointment.
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 better-than-expected third-quarter earnings on Thursday, sending its shares to a record high, while smaller rival United Overseas Bank profit dropped after it booked hefty credit allowances.
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