Oversea-Chinese Banking Corporation (O39) Q2 2025 earnings summary

Executive summary

• Net profit for 1H25 was S$3.70 billion, down 6% year-over-year from S$3.93 billion in 1H24, mainly due to lower net interest income despite robust fee and trading income growth.

• Total income was S$7.20 billion, nearly flat year-over-year, as non-interest income rose 8% to S$2.57 billion, offsetting a 5% decline in net interest income.

• Asset quality remained stable with an NPL ratio of 0.9% and NPA coverage at 156%.

• Interim dividend of 41 cents per share declared, representing a 50% payout ratio.

• Operating expenses increased 3% year-over-year, with a cost-to-income ratio of 38.9%.

Financial highlights

• Net interest income fell 5% year-over-year to S$4.63 billion due to a 25bps drop in net interest margin to 1.98%.

• Non-interest income rose 8% to S$2.57 billion, driven by a 19% increase in fee income and 6% growth in trading income.

• Customer loans grew 9% year-over-year to S$325 billion; deposits rose 10% to S$407 billion, with CASA deposits up 14% and CASA ratio at 49.8%.

• Annualised ROE was 12.6%, down from 14.5% a year ago; EPS was S$1.64, down 6%.

• Allowances for loans and other assets increased to S$326 million from S$313 million.

Outlook and guidance

• Management expects a challenging outlook due to evolving trade, monetary policies, and geopolitical tensions.

• The Group remains committed to a S$2.5 billion capital return plan, including a special dividend and share buybacks by 2026.

• FY 2025 NIM expected at 1.9%-1.95% due to declines in SORA and HIBOR; net interest income to fall mid-single digit percentage.

• Loan growth guidance maintained at mid-single digit; cost-to-income ratio to remain in low 40s.

• Credit cost guided at 20-25 basis points; proactive risk management and tight underwriting to continue.