Oversea-Chinese Banking Corporation Limited

OCBC reported Q2 2026 group net profit of SGD 2.2 billion, up 22% year on year, crossing SGD 2 billion for the first time in a quarter. Total income rose 18% year on year to SGD 4.17 billion; net interest income was SGD 2.26 billion, down 1% year on year but up 2% quarter on quarter; and noninterest income rose 51% year on year. Cost-to-income ratio improved to 37.8%, NPL ratio stayed at 0.9%, and second-quarter credit costs were 14 basis points annualized. For the first half, net profit rose 13% to SGD 4.19 billion, total income rose 11% to SGD 8 billion, and annualized ROE was 13.7%. Guidance: management now expects full-year loan growth in the high-single-digit to low-double-digit range, full-year income to grow year on year with a slight decline in NII, cost-to-income ratio in the low-40% range, and full-year credit costs likely at the lower end of the earlier 20 to 25 basis point guide. The bank also said it expects NIM to stabilize in the second half and noted June exit NIM was 1.67%.

The CEO framed the quarter as proof that the Next Frontier strategy is gaining traction, emphasizing broad-based growth across banking, wealth and insurance. He pointed to the strength of strategic areas like right-Asia, tech, and sustainable finance, and said loan growth in Q2 was exceptional partly because of some M&A-related activity. He was optimistic on wealth and Hong Kong but repeatedly stressed discipline on acquisitions and capital deployment.

The CFO highlighted record earnings, with Q2 net profit at SGD 2.2 billion, total income at SGD 4.17 billion, and first-half profit at SGD 4.19 billion. She noted NII of SGD 2.26 billion, a 6 bp Q/Q NIM decline to 1.70%, and explained that wholesale funding and higher treasury assets were used to support strong loan growth and protect NII in a lower-rate environment. She also said first-half operating expenses were SGD 3.08 billion, up 10% year on year, while CET1 was 14.0% fully phased-in and 15.7% transitional; the board declared an interim dividend of SGD 0.47 and the bank still plans to complete the remaining SGD 2.5 billion capital return by FY26.

Analysts pressed management on whether the strong loan growth and capital return plan were sustainable with CET1 already around the 14% target. Management said it is comfortable operating around 14%, may move slightly above or below quarter to quarter, and can use balance-sheet optimization if needed; it also ruled out equity raising. Questions on Hong Kong and China cross-border rules drew a cautious response: Bank of Singapore said it only serves offshore clients, has not seen significant asset outflows so far, and is still contacting clients. On Great Eastern, management said the volatile mark-to-market contribution may remain choppy, but underlying insurance results are solid and the high-net-worth proposition has seen growth ahead of expectations.