- 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.
