- OCBC (SGX:O39) launched a refreshed strategy to accelerate its growth trajectory across Asia. Through its four growth pillars (capture rising Asian wealth, support increasing trade and investment flows, unlock value from new economy through digitisation, and drive sustainability),
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Dividend policy could be a rerating catalyst.
- Management guided for dividends to be 60% total dividend payout ratio for FY2025 plus share buybacks, after declaring 41 cents (1H24: 44 cents) dividend per share at 1H25, representing a 50% dividend payout ratio. Should there be a revision in dividend policy to further enhance shareholder returns, this could be a rerating catalyst for OCBC.
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Seeing a turning point in NIM.
- OCBC is likely to see some 4Q25 NIM improvement q-o-q from exit NIM of 1.84% (3Q25: 1.84%) with impact from flagship account rate cuts from Aug 2025 coming through, alongside slowing decline in S$ rates during 4Q25 (average 3M SORA OIS declined 20bps during 4Q25, compared to 61bps during 3Q25).
- We expect a seasonally weaker quarter for non-interest income across wealth and trading fees, against a high base during 3Q25. Asset quality looks to be benign during 4Q25.
Downside risks from asset quality cushioned by high non-performing loan (NPL) coverage ratio.
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