OCBC to pay 47-cent dividend as Q2 profit jumps 22% to $2.22 billion; shares cross $30 for the first time

SINGAPORE – OCBC Bank’s net profit for the second quarter of 2026 grew 22 per cent as strong non-interest income led by wealth management cushioned the impact of lower interest rates.

Earnings for the quarter ended June 30 were $2.22 billion, up from $1.82 billion a year ago and beating analysts’ forecasts of $1.91 billion in a Bloomberg poll.

The bank declared an interim dividend of 47 cents per share for the first half of 2026, up from 41 cents a year ago.

The interim dividend payout will amount to an estimated $2.11 billion, or approximately 50 per cent of the group’s net profit after tax of $4.19 billion for the first half.

OCBC shares crossed the $30 mark for the first time, hitting a record high of $30.50, before paring gains to close up 3.31 per cent at $30.30 on Aug 7. DBS Bank, too, closed 1.67 per cent higher at a fresh peak of $76.33. UOB, however, ended down 0.64 per cent at $43.30.

OCBC group chief executive Tan Teck Long said at the bank’s results briefing that its loan pipeline remains robust, supported by growth industries. However, he noted that loan growth for the rest of 2026 is unlikely to match the pace seen in the second quarter, which “was really outstanding in terms of loan growth”.

The “exceptional” loan growth in the quarter was partly because of some merger and acquisition transactions that the bank was backing.

He noted that equity markets continued to be volatile and the bank saw a slight moderation in customer investment activity in July, given the cautious market sentiment.

“Notwithstanding this, we are pleased that our customer acquisition remains healthy, and we still see good flows. Long-term demand for wealth solutions continues to be strong,” he said.

Tan also noted that the bank remained disciplined in evaluating acquisition opportunities and would not pursue targets that were not strategically aligned or did not materially contribute to its growth. He said he was not opposed to acquisitions and would consider a deal if the right target emerged.

He cited OCBC’s acquisition of HSBC Indonesia’s retail banking and wealth management operations in May as an example, adding that his personal preference was for wealth-related portfolios.

“I don’t have a preference for corporate loan portfolios because we believe that we can grow that portfolio on our own. We are very competitive in terms of gaining market share and growing loans, so I don’t really need that,” Tan said.

He added that the bank remained fundamentally risk-averse and continued to balance risk with returns. Given that the current environment carries substantial risk, Tan said the bank exercised extra caution when evaluating loan portfolios to avoid taking on assets that could lead to future credit losses.

Second-quarter net interest income at OCBC declined 1 per cent to $2.26 billion amid a lower interest rate environment.

Net interest margin fell to 1.7 per cent, 22 basis points below the 1.92 per cent a year ago, but the impact was partly cushioned by a 12 per cent growth in average assets.

Non-interest income rose 51 per cent to $1.91 billion, driven by strong broad-based growth across fee, trading and insurance income.

Fees were up 28 per cent, led by wealth management, while trading income rose 85 per cent and insurance income jumped 68 per cent.

Total allowances increased to $156 million from $114 million a year ago, mainly from higher allowances for impaired assets.

OCBC group chief financial officer Goh Chin Yee said that new non-performing asset formation in the second quarter arose mainly from the downgrades of two Greater China corporate real estate accounts that were previously under special mention and were proactively managed.

She added that this was partly compensated by net recoveries, mostly from Greater China corporate real estate upgrades, as well as write-offs. Asset quality remained healthy, with the non-performing loan ratio stable at 0.9 per cent, she said.

In a statement, Tan said that global conditions remain uncertain amid geopolitical tensions and elevated inflation risks, with much of the near-term outlook depending on the easing of Asia’s energy crunch brought about by the war in the Middle East.

Meanwhile, artificial intelligence and related technology sectors continue to register strong growth, he noted.

Tan added that the bank is well-positioned to navigate these uncertainties and tap the growth sectors to deliver sustainable long-term value, with its strong capital, funding and liquidity position, as well as diversified income streams and disciplined risk management.

OCBC updated its 2026 financial targets, including high-single-digit to low-double-digit loan growth, up from mid-single-digit loan growth previously, given the strong half-year loan growth.

It also guided for total income to grow, up from previous expectations for stable-to-growing total income.

The bank now expects a slight decline in net interest income, up from a slight-to-moderate decline previously. It still expects credit costs in the range of 20 to 25 basis points.

Singapore banks are expanding aggressively in the wealth space.

OCBC said in July that it will progressively launch what it says is South-east Asia’s first AI-native mobile banking app, introducing two virtual avatars that can engage customers round the clock with personalised wealth management insights.

To further support its wealth push, the bank will hire 600 additional relationship managers for its consumer banking business over the next three years.

It is also cutting private banking account opening times down to 15 business days – lower than the industry median duration of about six weeks – with a new agentic AI platform called Helios, to speed up the onboarding of wealthy customers.

UOB and OCBC reported their second-quarter earnings on Aug 7, with DBS kicking off the earnings season on Aug 6.

DBS declared 81 cents in dividends per share for the second quarter, as net profit for the period grew 9 per cent on record wealth management income.

DBS’ net profit came in at $3.08 billion, up from $2.82 billion in the year-ago period, surpassing analysts’ expectations of $2.87 billion.

UOB posted a 10 per cent rise in net profit to $1.48 billion and declared an interim dividend of 88 cents per ordinary share for the half-year, up from 85 cents a year ago.