OCBC Sees Continued Headwinds in 2026 — Update

By Megan Cheah and Amanda Lee

Oversea-Chinese Banking Corp.'s net profit rose in the fourth quarter, driven by noninterest income.

Net profit for the three months ended December climbed 3.0% from the same period a year earlier to 1.745 billion Singapore dollars, equivalent to US$1.38 billion, the Singapore lender said Wednesday.

During the quarter, total income rose 6.0% to S$3.62 billion.

Net interest income--the difference between what banks earn on loans and pay on deposits--fell 6.0% to S$2.30 billion, attributed to asset yields compressing at a faster pace than deposit costs in a declining interest-rate environment.

Net interest margin stood at 1.86%, compared with 2.15% in the previous corresponding quarter.

Quarterly noninterest income rose 37% due to broad-based growth across fee, trading and insurance income, said OCBC, Singapore's second-largest lender by assets.

For 2025, net profit dropped 2.0% to S$7.42 billion due to lower net interest income.

The lender proposed an ordinary dividend of S$0.42 a share and a special dividend of S$0.16 a share.

Looking ahead, the bank expects 2026 total income to be "stable to growing," while net interest income is likely to see a "slight to moderate decline." Loan growth is expected at mid-single digit, it added.

OCBC also expects to complete a S$2.5 billion capital-return plan by this year.

"Global conditions are likely to remain uncertain, shaped by geopolitical tensions, evolving trade dynamics and interest rate uncertainty," said OCBC Group Chief Executive Tan Teck Long.

He expects the lender's strong balance sheet and risk management to help it navigate the challenging environment.

OCBC shares have hit successive record highs in recent weeks, bringing gains this year to around 8% following a 20% rise in the final quarter of 2025.

The advances by OCBC and other banking heavyweights helped the benchmark FTSE Straits Times Index cross the 5000 milestone this month.

Singapore's stock market has been driven by investor interest across the region, especially with the central bank's equity-market development program, said CGS International analyst Tay Wee Kuang.

However, the banking sector is unlikely to experience much earnings growth this year due to a lower interest-rate environment, said Tay, who has a neutral rating on Singapore lenders.

OCBC's local rivals, United Overseas Bank and DBS, both recorded lower net profit for the fourth quarter.

Write to Megan Cheah at megan.cheah@wsj.com and Amanda Lee at amanda.lee@wsj.com

(END) Dow Jones Newswires

February 24, 2026 19:49 ET (00:49 GMT)