Company Coverage
Oversea-Chinese Banking Corp (OCBC SP): 2Q26: Momentous Blockbuster Results
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$30.30
S$33.35
10.1%
S$31.60
Analyst
Highlights
- 2Q26 results demonstrate OCBC’s consistency in execution, as it delivered rapid growth in wealth management, trading income and insurance.
- NPL formation was manageable at S$300m in 2Q26. Among Singapore banks, OCBC has the highest loan-loss coverage of 163%.
- 2Q26 is the second consecutive quarter of sterling financial performance. Maintain BUY. Target price: S$33.35.
Analysis
- Oversea-Chinese Banking Corp (OCBC) reported a record quarterly net profit of S$2,221m for 2Q26 (+22% yoy, +12% qoq), well above our forecast of S$1,947m. Earnings were driven by strong growth in non-interest income, particularly wealth management, trading income and insurance.
- Volume growth offset negative impact from NIM compression. Net interest margin (NIM) declined 22bp yoy and 6bp qoq to 1.70% in 2Q26 due
to downward repricing of loans and higher wholesale funding costs. Net interest income still increased 2% qoq to S$2,264m as average interest earning assets expanded 5% qoq, supported by growth in customer loans and deployment of excess deposits into high-quality liquid assets. Loan growth of 12% yoy and 5% qoq was driven technology, media & telecommunications (TMT), digital infrastructure, energy, power & utilities
and transport sectors.
- Fee income was lifted by record wealth management activities. Net fee income grew 28% yoy and 10% qoq to a record S$739m. Wealth
management fees increased 39% yoy to a new quarterly high of S$470m, supported by broad-based customer flows across various investment
products. AUM expanded 13% yoy to a record S$350b, driven by strong net new money inflows. Loan-related fees grew 15% yoy.
- Trading income surged on customer flow and investment performance. Net trading income jumped 85% yoy and 60% qoq to a record S$695m.
Customer flow income grew strongly across both wealth and corporate segments, reflecting robust treasury product demand and hedging activities. Non-customer flow income was driven by investment gains from Great Eastern following the rebound in equity markets during 2Q26.
- Insurance becomes a substantial growth driver. Income from life and general insurance increased 68% yoy to S$382m in 2Q26, benefitting from
stronger underlying insurance performance and higher investment returns. Profit contribution from Great Eastern increased 44% yoy during 1H26.
- Income from Bank of Ningbo grew 24% yoy to S$325m in 2Q26.
- Operating efficiency improved despite ongoing investments. Operating expenses rose 13% yoy and 5% qoq to S$1,575m, reflecting higher
performance-linked remuneration and continued investments in technology and talent. Nevertheless, cost-to-income ratio improved to 37.8%, compared with 39.1% a year ago and 39.3% in 1Q26.
- Asset quality remained resilient. NPL formation was S$300m during 2Q26, mainly related to downgrades of two Greater China corporate real
estate accounts under special mention. NPL ratio was unchanged at 0.9%. Total allowances declined 28% qoq to S$156m, resulting in credit costs of 14bp vs 23bp in 1Q26. Loan-loss coverage remained strong at 163%.
- Higher dividend and commitment to capital return. OCBC declared an interim dividend of 47 S cents per share, up 15% yoy, representing a 50%
payout ratio. Management reaffirmed its commitment to complete the remaining S$2.5b capital return programme by Dec 26.
Highlights
- 2Q26 results demonstrate OCBC’s consistency in execution, as it delivered rapid growth in wealth management, trading income and insurance.
- NPL formation was manageable at S$300m in 2Q26. Among Singapore banks, OCBC has the highest loan-loss coverage of 163%.
- 2Q26 is the second consecutive quarter of sterling financial performance. Maintain BUY. Target price: S$33.35.
Analysis
- Oversea-Chinese Banking Corp (OCBC) reported a record quarterly net profit of S$2,221m for 2Q26 (+22% yoy, +12% qoq), well above our forecast of S$1,947m. Earnings were driven by strong growth in non-interest income, particularly wealth management, trading income and insurance.
- Volume growth offset negative impact from NIM compression. Net interest margin (NIM) declined 22bp yoy and 6bp qoq to 1.70% in 2Q26 due
to downward repricing of loans and higher wholesale funding costs. Net interest income still increased 2% qoq to S$2,264m as average interest earning assets expanded 5% qoq, supported by growth in customer loans and deployment of excess deposits into high-quality liquid assets. Loan growth of 12% yoy and 5% qoq was driven technology, media & telecommunications (TMT), digital infrastructure, energy, power & utilities
and transport sectors.
- Fee income was lifted by record wealth management activities. Net fee income grew 28% yoy and 10% qoq to a record S$739m. Wealth
management fees increased 39% yoy to a new quarterly high of S$470m, supported by broad-based customer flows across various investment
products. AUM expanded 13% yoy to a record S$350b, driven by strong net new money inflows. Loan-related fees grew 15% yoy.
- Trading income surged on customer flow and investment performance. Net trading income jumped 85% yoy and 60% qoq to a record S$695m.
Customer flow income grew strongly across both wealth and corporate segments, reflecting robust treasury product demand and hedging activities. Non-customer flow income was driven by investment gains from Great Eastern following the rebound in equity markets during 2Q26.
- Insurance becomes a substantial growth driver. Income from life and general insurance increased 68% yoy to S$382m in 2Q26, benefitting from
stronger underlying insurance performance and higher investment returns. Profit contribution from Great Eastern increased 44% yoy during 1H26.
- Income from Bank of Ningbo grew 24% yoy to S$325m in 2Q26.
- Operating efficiency improved despite ongoing investments. Operating expenses rose 13% yoy and 5% qoq to S$1,575m, reflecting higher
performance-linked remuneration and continued investments in technology and talent. Nevertheless, cost-to-income ratio improved to 37.8%, compared with 39.1% a year ago and 39.3% in 1Q26.
- Asset quality remained resilient. NPL formation was S$300m during 2Q26, mainly related to downgrades of two Greater China corporate real
estate accounts under special mention. NPL ratio was unchanged at 0.9%. Total allowances declined 28% qoq to S$156m, resulting in credit costs of 14bp vs 23bp in 1Q26. Loan-loss coverage remained strong at 163%.
- Higher dividend and commitment to capital return. OCBC declared an interim dividend of 47 S cents per share, up 15% yoy, representing a 50%
payout ratio. Management reaffirmed its commitment to complete the remaining S$2.5b capital return programme by Dec 26.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$30.30
S$33.35
10.1%
S$31.60
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
