Oversea-Chinese Banking Corporation (O39) Q1 2025 earnings summary

Executive summary

• Net profit for Q1 2025 was S$1.88 billion, up 12% quarter-on-quarter but down 5% year-on-year from a record quarter.

• Total income grew 7% sequentially and 1% year-on-year to S$3.66 billion, with non-interest income up 36% quarter-on-quarter and 10% year-on-year.

• Wealth management income and AUM reached record highs, with AUM at S$306 billion and net new money inflows of S$5 billion.

• Asset quality remained strong, with an NPR/NPL ratio of 0.9% and NPA coverage at 162%.

• Prudent allowances set aside for non-impaired assets amid macroeconomic uncertainty and geopolitical risks.

Financial highlights

• Net interest income declined 4% quarter-on-quarter and year-on-year to S$2.35 billion due to lower loan yields and NIM compression.

• Non-interest income rose to S$1.31 billion, driven by higher wealth-related fees, trading, and insurance income.

• Cost-to-income ratio improved to 38.7%, with operating expenses down 9% quarter-on-quarter.

• Group loans grew 7% year-on-year to S$322 billion, with customer deposits up 9% to S$403 billion.

• EPS (annualised) was S$1.68; ROE (annualised) at 13.0%.

Outlook and guidance

• Financial targets are maintained despite macroeconomic uncertainty, with plans for three rate cuts in the remainder of the year.

• Loan growth is expected to remain in the mid-single digits, with cost-to-income ratio targeted in the low forties and credit costs between 20-25 basis points.

• Committed to a 60% dividend payout ratio and ongoing share buybacks as part of S$2.5 billion capital return over two years.

• Regional growth outlook is more cautious amid trade tensions and geopolitical risks.