OCBC Banking Operations Profit Hits Record as NII Rebounds
Net interest income rose 2% to S$2.31 billion, the highest over six quarters, as loan growth and higher yields more than offset funding costs.
Oversea-Chinese Banking Corporation (OCBC) reported net interest income of S$2.31 billion in the third quarter of 2026, up 2% from the prior quarter and the highest level over six quarters, as 3% growth in average assets and higher yields more than offset higher funding costs.
Net interest margin compressed 4 bps to 1.66% from 1.70% in the second quarter. Higher SORA rates were a net positive as asset yields rose faster than funding costs, while rising US rates pressured margins as funding repriced faster than assets. The bank said the benefits from higher US rates would be reflected in coming quarters as assets reprice.
Customer loans reached S$372 billion, up 3% quarter-on-quarter on a constant-currency basis after 5% constant-currency growth in the second quarter; year-on-year growth was 14%. Customer deposits were S$461 billion, up 1% from June. The CASA ratio slipped 0.9 percentage points to 48.4%, and the loans-to-deposits ratio rose to 79.5% from 78.4%.
Banking Operations profit rose 8% to a record S$1.90 billion. Net fees of S$735 million were comparable to the record second-quarter level, while customer flow trading income rose to a record S$480 million. Total trading income fell 33% from a high second-quarter base on Great Eastern Holdings bond mark-to-market losses and the absence of second-quarter equity gains. Excluding GEH, Banking WM income rose 2% to a record S$1.12 billion, and Banking WM AUM grew 2% to a new high of S$358 billion. Group WM income fell 25% on weaker GEH investment performance.
Group net profit was S$2.04 billion, down 8% from a record S$2.22 billion in the second quarter, as weaker GEH investment performance offset the Banking Operations gain. Annualised ROE was 13.1%. Operating expenses were S$1.52 billion, 3% lower, and cost-to-income was 40.8% versus 37.8% in the second quarter.
Credit costs fell to 6 bps annualised from 14 bps in the second quarter. Total allowances were S$52 million, down from S$156 million, mainly from lower allowances for impaired assets of S$43 million versus S$122 million. The NPL ratio improved 0.1 percentage point to 0.8% from 0.9%. NPAs fell 3% to S$3.04 billion as recoveries and upgrades more than offset benign corporate NPA formation, and NPA coverage rose 5 percentage points to 168%.
CET1 CAR under transitional final Basel III reforms eased 0.2 percentage points to 15.5% from 15.7%; fully phased-in CET1 was unchanged at 14.0%. The bank said balance-sheet management initiatives further enhanced capital efficiency, with scope for continued progress.
Group CEO Tan Teck Long said global conditions remain uncertain amid geopolitical tensions and elevated inflation risks, with the near-term outlook dependent on easing energy prices from the Middle East war and market conditions in Indonesia. He said AI and related technology sectors continue to register strong growth.