OCBC Bank - Maybank Research 2025-11-07: Upgrade To BUY For Synergies & More Capital Returns

• OCBC (SGX:O39) delivered 9M25 core-earnings ahead of MIBG/Street expectations. One Group synergies are delivering, which should give downside protection to ROEs amidst operational volatility.
• - Read this at SGinvestors.io -
• We think current dividend momentum should continue to 2026E.

One Group synergies delivering

• Management claims the goal of achieving incremental S$3bn of income by end-2025 through One Group synergies have been surpassed. NoII came in significantly above expectations. Specifically, 3Q wealth fees were +35% q-o-q after growing on average +5% q-o-q in the previous 3-quarters.
• The flywheel effect of upgraded systems, new RMs and FDs converting to higher yield investment products is set to accelerate going into 2026E, in our view.
• - Read this at SGinvestors.io -

Resilient asset quality, SG growth

• Loans expanded +7% y-o-y – the fastest amongst peers. Singapore led (+9% y-o-y). We believe OCBC’s SME gearing could be an advantage as Singapore undergoes a construction boom. While NIMs fell -8bps q-o-q, this was the slowest pace in the past 3-quarters. The Sep exit NIM of 1.84% is similar to full 3Q, signifying some margin stabilisation.
• Together with excess liquidity invested in HQLA, we think NII momentum could remain positive in 2026E.
• Separately, Group NPA coverage stands at 160% - the highest amongst peers. GP to loans are at 0.9%. This gives significant buffer for negative provisioning surprises, in our view.

Raise target price to S$20.52.

• Read more at SGinvestors.io.

Thilan Wickramasinghe Maybank Research | https://www.maybanktrade.com.sg/ 2025-11-07

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