OCBC, UOB post higher Q2 profit on stronger fee income

OCBC posted a 22 per cent rise in second-quarter net profit, while UOB saw a 10 per cent increase in net profit in the second quarter, helped by record wealth fees.

SINGAPORE: Singapore's Oversea-Chinese Banking Corp raised its 2026 loan growth outlook after posting a 22 per cent rise in second-quarter net profit to a quarterly record that beat expectations, as strong fees, trading and insurance income more than offset margin pressure.

OCBC, Singapore's second-largest bank, said on Friday (Aug 7) its April-June net profit jumped to S$2.22 billion (US$1.73 billion), ahead of the average estimate of S$1.93 billion from three analysts, according to LSEG data.

OCBC CEO Tan Teck Long said in a statement the bank now expects high-single-digit to low-double-digit loan growth in 2026, compared with its previous forecast for mid-single-digit growth, while total income is expected to grow despite a slight decline in net interest income.

Its cost-to-income ratio is expected to remain at the low 40 per cent level and credit costs to be in the range of 20 to 25 basis points.

The bank maintained its 50 per cent ordinary dividend payout ratio and said it remained committed to completing its S$2.5 billion capital return plan by the end of 2026.

Tan flagged uncertainty from the evolving Middle East conflict and energy market developments, alongside what he described as K-shaped economic growth across major economies.

But he said the bank's strong capital, funding and liquidity position would support growth while providing a buffer against uncertainty.

Investors are focused on how lenders are managing interest-rate pressure and whether wealth, transaction-banking and markets income can offset narrowing in lending margins.

OCBC's net interest margin, a key gauge of profitability, fell to 1.70 per cent in the second quarter from 1.92 per cent in the same period a year earlier.

OCBC declared an interim dividend of 47 Singapore cents per share, up 15 per cent from 41 cents a year earlier. OCBC's second-quarter return on equity rose to 14.4 per cent, from 12.3 per cent a year earlier.

The bank's results came on the same day as its smaller Singapore-based peer UOB posted a 10 per cent rise in net profit in the second quarter, helped by record wealth fees.

UOB said April-June net profit was up 10 per cent to S$1.5 billion from S$1.34 billion a year earlier.

This was higher than the mean estimate of S$1.4 billion from three analysts, according to LSEG data.

UOB CEO Wee Ee Cheong said the bank's results were a reflection that its ASEAN strategy is gaining traction, with wealth management and transaction banking benefitting from healthy customer activity across the region.

"We are seeing good progress across our businesses as we deepen customer relationships, expand our capabilities and connect customers to opportunities across our regional network," he said.

"Looking ahead, we see significant opportunities to grow wealth, support cross-border ambitions and capture a larger share of trade and investment flows across ASEAN."

Larger peer DBS Group posted on Thursday a 9 per cent rise in second-quarter net profit, also a record, that beat expectations.

The Singapore banks joined Asia-focused rivals HSBC and Standard Chartered in reporting robust growth in wealth management fee income, as inflows into safe-haven financial hubs such as Singapore amid geopolitical uncertainty and strong regional equity markets boosted the ranks of Asia's rich.