Report Summary

• OCBC delivered a strong 3Q25 performance, with net profit of S\$1.98bn, beating consensus expectations, driven by significant growth in wealth management and non-interest income.
• The bank’s wealth management franchise saw record net new money inflow and fee income, and OCBC upgraded its rating to Add with a higher target price of S\$19.50, reflecting its structural shift towards non-interest income and flexible capital return plans.
• OCBC’s non-interest income surged, especially from wealth management and trading, offsetting net interest margin compression. The bank maintained resilient asset quality with lower credit costs and continues to focus on expanding its wealth business across customer segments.
• ESG scores for OCBC improved, particularly on environmental metrics, though some social and product responsibility controversies were noted. Governance remains strong, with no major governance-related controversies.
• OCBC’s financial outlook is stable, with mid-single-digit loan growth, low 40% cost-income ratio, and a dividend payout ratio maintained at around 60%. The bank retains flexibility to return excess capital via special dividends or buybacks.
• Sector comparison positions OCBC competitively among Singapore banks, with solid ROE, attractive dividend yield, and strong growth in non-interest income.
• Risks include weaker macroeconomic conditions, slower non-interest income growth, and higher provisions, but upside catalysts are resilient NIMs, continued non-II expansion, and potential credit cost write-backs.