Report Summary

• CGS International expects OCBC to report resilient 4Q25F results, with net profit of S\$1.73bn, supported by mark-to-market gains in its insurance business and strong non-interest income growth.
• OCBC is likely to announce further capital return initiatives beyond FY25F, following the completion of its previous S\$2.5bn programme, including additional special dividends and share buybacks.
• The broker reiterates an Add rating on OCBC, raising its target price to S\$23.40 due to lower cost of equity assumptions, and sees OCBC as a top sector pick for its attractive dividend yields and continued wealth management outperformance.
• ESG scores for OCBC have improved, particularly in environmental practices, and the bank has addressed past controversies related to trade finance and phishing scams, with governance metrics remaining strong.
• Downside risks include potential declines in non-interest income and higher credit costs due to macroeconomic deterioration, but overall sector comparison shows OCBC remains competitive among regional peers.