OCBC Earnings: FY2025 Down 2%, Q4 Profit Up – Latest Updates
Oversea-Chinese Banking Corporation (OCBC) reported a mixed financial year 2025, with a 2% decline in full-year earnings to , despite a 3% year-on-year increase in fourth-quarter earnings. The bank’s full-year net profit reached $7.42 billion, according to results released .
The dip in full-year earnings was partially offset by a strong fourth quarter, which saw net profit climb to $1.745 billion. Total income for the year reached $14.6 billion, a 1% increase from . However, net interest income decreased by 6% to $9.15 billion, while non-interest income experienced a significant 16% rise, reaching $5.46 billion.
A key driver of the positive results was record-level wealth management income. OCBC Group CEO Tan Teck Long highlighted the bank’s sustained loan growth and strong asset quality as contributing factors. “These results reflect the strength of our fundamentals and our disciplined execution amid a challenging operating environment,” Tan said in a statement accompanying the earnings report.
Dividend and Capital Return
Despite the slight decline in overall earnings, OCBC intends to maintain a substantial return of capital to shareholders. The bank plans a total dividend payout of 99 cents per share for FY2025, compared to $1.01 per share in FY2024. This includes a final dividend of 42 cents and a special dividend of 16 cents, drawn from a $2.5 billion capital return plan slated for completion by FY2026. An interim dividend of 41 cents had already been paid, bringing the total payout to 99 cents, representing a 60% payout ratio.
Allowances and Asset Quality
OCBC reported total allowances of $665 million for FY2025, a 4% decrease year-on-year. This reduction was primarily attributed to lower allowances for non-impaired assets. In the fourth quarter, the bank impaired $236 million, largely related to two corporate real estate accounts, but also wrote back $36 million.
Strategic Outlook and Income Stability
The bank is building on the progress made with its “One Group” corporate strategy, initiated under former CEO Helen Wong, and is now launching a new multi-year strategy dubbed “The Next Frontier.” Looking ahead, OCBC anticipates income to remain stable to rising in , though the outlook remains cautious.
The increase in fourth-quarter profit was driven, in part, by a 6% quarter-on-quarter improvement in net interest margin, reaching 1.86% in . This was despite a 6% year-on-year decline in net interest income to $2.30 billion, as asset yields decreased faster than deposit costs in a lower interest rate environment. The impact of this was partially mitigated by an 8% growth in average assets.
Growth in Non-Interest Income
Non-interest income experienced robust growth, rising 37% year-on-year to $1.32 billion. This growth was broad-based, with increases across fee, trading, and insurance income. Net fee income increased by 16% to $602 million, fueled by a 26% rise in wealth management fees, alongside gains in loan-related, brokerage, fund management, and credit card fees. Net trading income also saw a substantial increase, climbing 30% to $395 million, boosted by stronger customer flow income from both wealth and corporate segments.
The results demonstrate OCBC’s ability to navigate a challenging economic landscape, leveraging its strengths in wealth management and maintaining a disciplined approach to risk management. The bank’s commitment to returning capital to shareholders, coupled with its strategic initiatives, positions it for continued growth in the coming years.