Oversea-Chinese Banking Corporation (SGX: O39), or OCBC, is another name that Singaporeans are familiar with, where the bank’s physical branches as well as ATMs are scattered across the island.
On top of Singapore, where the bank is headquartered, its other key markets include Malaysia, Indonesia, and Greater China. In total, the bank has a business presence in 19 countries and regions where it has close to 420 branches. Of note is that OCBC is currently the second largest financial services group in Southeast Asia by assets.
This morning (09 May 2025), OCBC is the last of the trio of Singapore banks to release its 1Q FY2025 business update. UOB is the first to do so on Wednesday (07 May), followed by DBS yesterday (08 May), and you can find my reviews via the following links:
- United Overseas Bank Limited’s 1Q FY2025 Business Update: What You Need to Know
- DBS Group Holdings Limited’s 1Q FY2025 Business Update: What Investors Need to Know
In this post, you will find my review of OCBC’s latest 1Q FY2025 business update in terms of its latest key financial figures and ratios:
Key Financial Figures (1Q FY2024 vs. 1Q FY2025)
| 1Q FY2024 | 1Q FY2025 | % Variance | |
| – Net Interest Income (S$’mil) | $2,437m | $2,345m | -3.8% |
| – Net Fee & Commission Income (S$’mil) | $479m | $546m | +14.0% |
| – Other Non-Interest Income (S$’mil) | $710m | $764m | +7.6% |
| Total Income (S$’mil) | $3,626m | $3,655m | +0.8% |
| Total Expenses (S$’mil) | $1,346m | $1,415m | +5.1% |
| Net Profit (S$’mil) | $1,982m | $1,883m | -5.0% |
Overall, it was a stable set of results for the 1st quarter reported by Singapore’s second largest bank.
On the positives, its net fee & commission income saw a 14.0% year-on-year jump to S$546 million (which was the highest across 5 quarters, between 1Q FY2024 and 1Q FY2025) from higher wealth-related, loan-related, and investment banking fees. Other non-interest income also improved by 7.6% year on year to S$764 million from higher trading (driven by both customer flow and non-customer flow income) and insurance income.
However, its net interest income dipped by 3.8% year on year to S$2.35 billion as net interest margin contracted by 23 basis points to 2.04% amid a declining interest rate environment. OCBC’s net profit also fell by 5.0% year on year to S$1.88 billion mainly due to an increase in allowances (by 25% year on year to S$212 million), as well as in amortisation, tax, and non-controlling interest (by 9% year on year to S$419 million).
Finally, total expenses went up by 5.1% year on year to S$1.4 billion, mainly driven by higher staff costs attributable to annual salary adjustments and volume-related compensation, and continued investments in technology.
Key Financial Ratios (4Q FY2024 vs. 1Q FY2025)
In the table below, you will find a comparison of 3 key financial ratios (net interest margin, return on equity, and non-performing loans ratio) reported by OCBC for the current quarter under review (i.e., 1Q FY2025 ended 31 March) against that reported in the previous quarter 3 months ago (i.e., 4Q FY2024 ended 31 December 2024):
| 4Q FY2024 | 1Q FY2025 | Difference (in Percentage Points – pp) | |
| Net Interest Income (%) | 2.15% | 2.04% | -0.11pp |
| Return on Equity (%) | 11.8% | 13.0% | +1.2pp |
| Non-Performing Loans Ratio (%) | 0.9% | 0.9% | – |
Net interest margin saw a 0.11 percentage point (pp) decline to 2.04%, largely due to loan yields tightening at a faster pace than deposit costs.
Return on equity improved by 1.2pp to 13.0% from the previous quarter, with non-performing loans ratio remained stable at 0.9% (with non-performing assets declining by 4.1% compared to a year ago to S$2.9 billion).
CEO Ms Helen Wong’s Comments and Outlook (from the Bank’s Press Release)
“Our first quarter results reflected the strength and diversity of our banking, wealth management and insurance franchise. We continued to see deposit inflows and loan growth, while portfolio quality remained sound. We have prudently set aside credit allowances to buffer our portfolio on a forward-looking basis, in view of the challenging economic outlook.
Looking ahead, the heightened uncertainties brought about by the shifts in trade policies and geopolitical risks are expected to have a dampening effect on overall economic growth in the region. As the situation continues to unfold, we remain watchful and vigilant in managing risks. With our strong balance sheet and capital position, we have the ability to navigate complexities while supporting our customers throughout our network.”
Closing Thoughts
While there are some slight negative seen as far as its net interest income (which dipped by 3.8% year on year, due to a declining interest rate environment) and net profit (largely due to an increase in allowance, as well as in amortisation, tax, and non-controlling interest) are concerned, but on the whole, its results is a rather robust one – particularly with its net fee and interest income recording a double-digit percentage year-on-year growth (by 14.0%), along with its other non-interest income improving by a high single-digit year on year percentage (by 7.6%).
This is in addition to its return on equity improving by 1.2pp from the previous quarter (i.e., 4Q FY2024 ended 31 December 2024) to 13.0%, and its non-performing loans ratio remaining at 0.9% (in fact, OCBC’s non-performing loans ratio is the lowest among the 3 Singapore-listed banks).
Finally, as the management of OCBC declares a dividend payout to the shareholders on a half-yearly basis (where typically, the management aims to pay out 50% of its earnings as dividends), there isn’t any being declared this time round.
With that, I have come to the end of my review of OCBC’s latest business update for the 1st quarter of FY2025. As much as I hope you have found the information presented in this post useful, do take note that all the opinions expressed within are purely mine which I’m sharing for educational purposes only. They do not constitute any buy or sell calls for the bank’s shares. Please do your own due diligence before you make any investment decisions.
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Disclaimer: At the time of writing, I am a shareholder of Oversea-Chinese Banking Corporation Limited.
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