
OCBC Q1 Net Profit Dips 5% to S$1.88 Billion, Surprising Analysts with Strong Results
2025-05-08
Author: Ming
OCBC Reports Impressive Earnings Amid Challenges
In a surprising revelation, OCBC Bank has announced its net profit for the first quarter of 2025, totaling S$1.88 billion, down 5% from S$1.98 billion in the same period last year. This decline comes amid a landscape plagued by lower net interest income and escalating operating expenses.
Earnings Defy Expectations
Despite the dip, the bank's earnings exceeded analysts' predictions. OCBC's profit showed a robust 12% improvement compared to the previous quarter’s S$1.69 billion, beating the consensus estimate of S$1.86 billion, according to a Bloomberg survey involving five analysts.
Difficult Interest Environment
During this quarter, net interest income fell by 4% to S$2.35 billion, primarily driven by a declining interest rate environment. As a result, the net interest margin also decreased by 23 basis points, slipping to 2.04% from 2.27% in the corresponding period last year.
Non-Interest Income Soars
On a brighter note, OCBC saw a 10% increase in non-interest income, which rose to S$1.31 billion, fueled by stronger performance in fees, trading, and insurance income.
Improved Loan Asset Quality
Furthermore, the bank's non-performing loans ratio showed signs of improvement, dipping to 0.9% from 1% a year prior, indicating a healthier loan portfolio.
Rising Operating Costs
Operating expenses, however, saw a 5% uptick year-on-year, totaling S$1.42 billion. This rise is attributed to increased staff costs from annual salary adjustments, along with ongoing investments in technology.
Provisions Increase Amid Economic Uncertainty
Total allowances for the quarter rose by 25% to S$212 million, including S$94 million for impaired assets and S$118 million for non-impaired assets, driven by changes in credit risk profiles and a cautious approach due to significant macroeconomic uncertainties.
Caution Moving Forward
OCBC Chief Executive Helen Wong expressed concern over the impact of ongoing trade policy shifts and geopolitical risks, anticipating a dampening effect on economic growth in the region. As analysts and investors look ahead, OCBC’s shares closed down 0.7%, or S$0.11, at S$16.16 just before this earnings announcement.