Oversea-Chinese Banking Corporation (O39) Q2 2024 earnings summary

Executive summary

• Net profit for 1H24 reached a record S$3.93 billion, up 9% year-over-year, with annualized ROE at 14.5% and total income surpassing S$7.26 billion for the first time.

• Broad-based income growth, disciplined cost management, and benign credit costs underpinned performance.

• Wealth management income and AUM reached record highs, with wealth management now contributing 35% of total income.

• Interim dividend raised 10% to 44 cents per share, representing a 50% payout ratio.

• Asset quality improved, with NPL ratio down to 0.9% and allowance coverage at 155%.

Financial highlights

• Net interest income rose 3% year-over-year to S$4.87 billion, driven by 5% asset growth.

• Non-interest income grew 15% to S$2.39 billion, led by higher fees, trading, and insurance income.

• Cost-to-income ratio improved to 37.5%, reflecting strict cost discipline.

• Group net profit for Q2 was S$1.94 billion, up 14% year-over-year but 2% lower sequentially.

• EPS (annualised) increased 9% to S$1.74; ROE (annualised) improved to 14.5%.

Outlook and guidance

• NIM guidance maintained at 2.2%-2.25%, expected to be at the lower end by year-end.

• Loan growth expected to remain in low single digits; credit costs projected at 20-25 basis points.

• Management remains confident in navigating macroeconomic challenges, citing a strong capital base and diversified earnings.

• Forward-looking scenarios for expected credit losses updated to reflect current macroeconomic conditions.

• Heightened geopolitical uncertainties acknowledged, but franchise strength and prudent risk management highlighted.