OCBC's 2Q25 core-PAT was in-line with MIBG and Street expectations.
In-line results. Capital returns visibility low.
NII is softening despite better than expected credit growth. NIMs are seeing pressure from falling domestic policy rates, and potential Fed rate cuts could add to the decline. Asset quality remains strong, so we lower our credit cost assumptions.
Rapid loan yield contraction following steep falls in HIBOR and SORA contributed. Sequential decline should decelerate in 2H as funding costs moderate. Potential Fed rate cuts in 2H also adds to NIM downside risks.
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NoII – led by fees – continue to see growth.
We expect low domestic rates and ‘risk-on’ market sentiment to drive wealth management upside along with market related fees such as IB and brokerage. Credit costs were significantly lower than expected from stronger asset quality. We think this can persist in the medium term.
CEO transition increases capital returns uncertainty.
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
