OCBC keeps 2025 earnings guidance amid uncertainties; Q1 profit falls 5% but beats forecast

SINGAPORE – OCBC Bank has maintained its 2025 earnings guidance despite warning of a challenging economic environment and posting a 5 per cent decline in first-quarter earnings.

Net profit for the three months to March 31 came in at $1.88 billion, down from $1.98 billion a year earlier, mainly on lower net interest income.

The decline – OCBC’s first quarterly earnings fall since the first three months of 2022 – still beat the $1.86 billion forecast by analysts in a Bloomberg survey.

Total allowances were 25 per cent higher at $212 million as the bank adopted a prudent approach in view of the uncertain operating environment ahead.

OCBC has maintained all its 2025 financial targets, including net interest margin in the region of 2 per cent, mid-single-digit loan growth and credit costs in the range of 20 to 25 basis points, noted chief executive Helen Wong on May 9.

Ms Wong told a results briefing that the bank still expects three rate cuts in the US in 2025 but warned that the outlook may change, given market uncertainties.

“If the economic situation is going down, (which means) economic growth is lower, loan growth will be lower as well,” she said.

Ms Wong noted in an earlier statement that the bank continued to see deposit inflows and loan growth despite the more volatile environment.

“Looking ahead, the heightened uncertainties brought about by the shifts in trade policies and geopolitical risks are expected to have a dampening effect on overall economic growth in the region,” she said.

“With our strong balance sheet and capital position, we have the ability to navigate complexities, while supporting our customers throughout our network.”

Group chief financial officer Goh Chin Yee said tariffs could cause a “first-order impact” on 3 per cent of OCBC’s loan book.

“We further stress-tested our portfolio for potential vulnerabilities and assessed that our portfolio remains resilient,” Ms Goh added.

Customer loans amounted to $322 billion as at March 31, up 7 per cent from $301 billion a year earlier, largely driven by the increase in residential mortgages and corporate loans, with lending to the transport, storage and communications sector growing the most.

Industries facing the most direct impact from US tariffs include manufacturing and goods production, excluding certain sectors such as pharmaceuticals and semiconductors that have been exempted, said Ms Wong.

International transport, storage of goods, raw materials and commodities could also be affected.

“These are very subject to the tariff impact. So we say that, together, this is about 3 per cent of our loan book,” said Ms Wong.

Meanwhile, clients that have a domestic focus will be less impacted as they may source domestically, she added.

She said OCBC has been working on attracting customer deposits and growing liquid assets amid market uncertainty.

Customer deposits rose 9 per cent year on year to $403 billion, on the back of growth in current and savings accounts and fixed deposits.

Net interest income for the quarter fell 4 per cent to $2.35 billion, mainly owing to net interest margins coming in at 2.04 per cent, down from 2.27 per cent in the same period in 2024.

Non-interest income surged 10 per cent year on year to $1.31 billion, underpinned by stronger wealth management fees, trading and insurance income.

Wealth management income was $1.37 billion, up from $1.29 billion from a year earlier, and contributed 38 per cent to total income, up from 36 per cent.

Return on equity fell to 13 per cent in the first quarter, from 14.7 per cent a year ago.

Ms Wong said the bank remains committed to deliver the 60 per cent dividend payout ratio and has commenced share buybacks in a $2.5 billion capital distribution plan announced in February.

OCBC’s results followed those of UOB and DBS Bank this week.

All three banks flagged tariff uncertainties but said they were well-cushioned with strong balance sheets and have boosted allowance reserves to offset potential non-performing assets.

While DBS and OCBC broadly maintained their 2025 earnings guidances and met analyst forecasts, UOB suspended its earnings outlook, citing tariff uncertainties, as it reported earnings below estimates.

OCBC shares closed 0.43 per cent higher at $16.23 on May 9.