OCBC reported 2Q25 revenue of S$3,547mil (-2% y-o-y, -3% q-o-q), while net profit came in at S$1,816mil (-7% y-o-y, -4% q-o-q).
Operating expenses rose 1% y-o-y but declined 2% q-o-q to S$1,389mil on continued cost discipline with cost-to-income ratio slightly higher at 39.1% (1Q25: 38.7%).
OCBC's 2Q25 revenue and net profit in line with consensus.
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NIM saw a 12bps q-o-q compression, primarily driven by a 50bps/200bps decline in S$/HKD benchmark rates, a 17bps decline in loan yields offsetting the 7bps improvement in funding costs, and a 2bps decline from treasury markets’ asset growth due to strategic liquidity deployment into high-quality assets in 1Q25.
Non-interest income lowered q-o-q, weighed down by insurance income.
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Trading income of S$375mil (+6% y-o-y, –5% q-o-q) was driven by stronger customer flow income while Great Eastern (SGX:G07) saw a lower contribution at S$226mil (- 23% q-o-q, -26% y-o-y).
2Q25 saw significantly lower credit costs of 12bps (1Q25: 24bps) driven by allowances for both impaired and non-impaired assets. Total allowances were higher q-o-q at S$114mil, 12bps (vs. 1Q25: S$212mil, 24bps) including general allowances (stage 1+2): S$49mil, 5bps (vs. 1Q25: S$118mil, 13bps) and specific allowances (stage3): S$65mil, 7bps (vs. 1Q25: S$94mil, 11bps). NPL ratio remained unchanged at 0.9%, with allowance coverage declining to 156% (1Q25: 162%).
Management lowered its FY25F NIM guidance and declared a lower interim dividend.
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Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
