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.
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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.
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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.
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/.
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