This was written with reference to the OCBC FY2025 Earnings Call Transcript found at https://finance.yahoo.com/quote/O39.SI/earnings/O39.SI-Q4-2025-earnings_call-413102.html
Just like DBS, OCBC faced the same macroeconomic "perfect storm" of falling rates and the new 15% global minimum tax, which caused its final net profit to dip 2% to SGD 7.42 billion. However, the underlying engine is roaring—Profit Before Tax (PBT) actually rose 2% to cross the SGD 9 billion mark for the first time in the bank's history.
OCBC posted a meteoric rise of 16% in Non-Interest Income for FY2025. If you want to understand OCBC's 2025 performance and 2026 trajectory, you have to look past the Net Interest Margin (NIM) noise and focus on what management calls the "WOW" strategy.
Whole-Of-Wealth WOW Factor
OCBC possesses a structural advantage that its peers do not: It owns a premier retail bank, a dedicated private bank (Bank of Singapore), and a massive insurance arm (Great Eastern).
Group CEO Tan Teck Long explicitly outlined the "Whole-of-Wealth" (WOW) strategy to integrate these platforms moving forwards. To enforce this, they have established a Wealth Management Committee, chaired by the CEO himself, to ensure a coordinated tone from the top.
Wealth management now contributes a massive 38% of the group's total income (up from 34% last year). They pulled in SGD 27 billion in Net New Money. Furthermore, Great Eastern is preparing to launch a targeted high-net-worth strategy to cross-sell to the bank's wealthy clients, unlocking a previously underweight segment.
Loan Volumes vs Margin Compression
SORA and HIBOR rates hurt the banks. OCBC saw its NII drop 6% and ended the year with an exit NIM of 1.84%.
However, they defended their absolute dollar income by aggressively growing the loan book. On a constant currency basis, loans grew by an impressive 9% year-on-year. They achieved this by targeting specific growth sectors like TMT (Technology, Media, and Telecom), digital infrastructure, and sustainable financing (which now accounts for 17% of total group loans). They replaced the margin they lost with raw, high-quality volume.
Boring But Beautiful Asset Quality
Investors can sleep well when NPL (Non-Performing Loan) ratios are flat. OCBC's NPL ratio has remained perfectly stable at 0.9% for seven consecutive quarters.
While they did downgrade two corporate real estate accounts in Greater China to non-performing status, management noted these were previously watchlisted and proactively managed. Their NPA (Non-Performing Asset) coverage stands at a fortress-like 151%. Total credit costs actually fell to just 17 basis points for the year. The balance sheet remains pristine.
Dividends And Capital Return Specials
OCBC announced a final ordinary dividend of 42 cents and a special dividend of 16 cents. Combined with the interim 41 cents, the total FY2025 dividend is SGD 0.99 per share, representing a 60% payout ratio.
OCBC is currently executing a SGD 2.5 billion capital return plan. CFO Goh Chin Yee confirmed they have about SGD 780 million remaining to distribute by FY2026
When asked how this remaining capital would be distributed, CEO Tan Teck Long made a definitive statement: "Between return capital via share buyback versus special dividend, I have preference for special dividend". He noted that special dividends reward the bank's broad base of long-term shareholders directly, rather than just those selling their shares back to the bank.
OCBC currently sits on a fortress-like fully phased-in CET1 ratio of 15.1%. However, management noted that their near-term target is to optimize this down to 14%. How do you reduce your capital ratio? You either deploy it for aggressive growth (like M&A or expanding the loan book) or you return it to shareholders.
Looking Ahead: 2026 Guidance
When forecasting 2026, CEO Tan Teck Long was pragmatic. He expects market conditions to remain uncertain, with continued pressure from softening interest rates. The bank is anchoring its projections on a benchmark SORA rate of around 1.4%.
Because of this rate pressure, management expects a slight to moderate decline in Net Interest Income (NII). To plug that gap, OCBC provided highly ambitious, growth-oriented guidance for the rest of the business:
- Total Income: Expected to remain stable or even grow, completely offsetting the NII drag.
- Loan Growth: Projected in the mid-single-digit range.
- Fee Growth: They are targeting double-digit growth in non-interest income, heavily driven by their wealth management segments.
- Credit Costs: Expected to remain benign at 20 to 25 basis points through the cycle.
"ADD" Strategy And ASEAN Pivot
To hit these growth targets, OCBC is not relying on the old playbook. They are executing four strategic shifts—Asia, Tech, NetZero, and Franchise—centered around what they call the "ADD" strategy: AI, Digital, and Data.
They are deliberately shifting focus toward ASEAN domestic markets to capture rising intra-Asia trade and wealth flows. A prime example of this is their aggressive positioning in the Johor-Singapore Special Economic Zone, where they have already financed more than MYR 15 billion worth of projects. With their 15.1% fully phased-in CET1 ratio, OCBC has plenty of dry powder to aggressively expand in the region as opportunities arise.
Furthermore, Great Eastern is not resting on its laurels. Their CEO, Greg Hingston, confirmed they have a progressive dividend policy, aiming to move up to a 50% payout ratio. They are also preparing to launch a targeted high-net-worth strategy, which will seamlessly integrate with the bank's wealthy client base.
The Verdict
The market narrative usually dictates that if you want aggressive growth and momentum, you buy DBS. If you want a deep-value, defensive yield, you buy UOB. OCBC suffers from "middle child syndrome" as something in-between the two. How exactly does OCBC fit in my portfolio?
By going through the FY2025 earnings, I think it has beceome quite clear that OCBC is not just the "in-between" bank. I don't buy OCBC to perfectly replicate DBS's trading momentum, and I don't buy it for UOB's value discount. I buy OCBC because I want a 60% dividend payout ratio generated by an integrated wealth, banking, and insurance machine, run by a CEO who explicitly wants to hand his excess capital back as special dividends. All Huat !
Disclaimer: This article represents my personal views and portfolio actions. It is not financial advice. Please do your own due diligence before investing.
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