OCBC (SGX:O39) is the only Singapore bank to guide for stable to improving income in FY26F, driven by double-digit growth in non-interest income, while confident of a mid-single digit loan growth.
Potential special dividends on the cards.
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Management has indicated preference to pay out unutilised share buyback amounts by end FY26F in the form of special dividends.
1Q26 preview:
Wealth management to continue being a driver of double-digit non-interest income growth, alongside markets trading income which is likely to benefit from 1Q26 market volatility. We continue to see more structural inflows boosting overall AUMs and net new money into OCBC, with OCBC having outgrown both peers during FY25 at 34% y-o-y for gross wealth management fees.
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Management is likely to continue deploying excess deposits via active balance sheet management to manage net interest income. We believe more provisions may be set aside to buffer for current macroeconomic conditions, though credit costs are still likely to stay within the higher end of guidance of 20-25bps.
Maintain BUY with higher target price of S$25.50.
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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/.
