OCBC reported fiscal year (FY) 2025 profit before tax of SGD 9.12 billion (approximately $6.8 billion), a 2% increase year on year, while net profit reached SGD 7.42 billion (approximately $5.5 billion) and total income rose to SGD 14.6 billion (approximately $10.8 billion). Net interest income declined 6% to SGD 9.15 billion (approximately $6.8 billion) as lending margins narrowed, with net interest margin standing at 1.91%. Non-interest income grew 16% to SGD 5.46 billion (approximately $4.0 billion). The cost-to-income ratio was 40.2%, return on equity stood at 12.6%, the fully phased-in common equity tier 1 ratio was 15.1%, and the non-performing loan ratio remained stable at 0.9%. The composition of these results highlights the structural drivers behind the year’s performance. Lending margins compressed as asset yields moderated, while fee income from wealth management, treasury activity and insurance expanded to offset the decline in net interest income. The bank said deposits gathered across retail, commercial and corporate relationships increasingly drive wealth management, treasury, and protection planning activity. Group chief financial officer Goh Chin Yee attributed the outcome to disciplined execution across multiple income streams. “Our record pre-tax profit was driven by three key factors: record total income, well-managed expenses and lower allowances. Non-interest income more than compensated for the decline in net interest income.” Group chief executive officer Tan Teck Long framed the results against a challenging macroeconomic backdrop. “Despite the challenges, the bank delivered a new high in income. We needed all cylinders firing. We expanded our loan book, grew deposits and achieved double-digit growth in non-interest income. Great Eastern also came in very strongly year on year.” He added that credit quality remained sound, with the non-performing loan ratio stable across seven consecutive quarters. Deposits as the entry point to wealth monetisation Customer deposits rose 10% to SGD 428 billion (approximately $316 billion), with current account savings account balances increasing to 14%, lifting the ratio to 50.7%. The expanding funding base provides a broader pool of client balances available for investment allocation and treasury activity. As these balances move beyond deposits into portfolio mandates, invested assets exceeded 60% of total assets under management, demonstrating that a growing share of client balances shifted into investment allocations. This progression from liquidity accumulation to advisory engagement becomes visible in fee performance, with wealth management fees rising 33% to SGD 1.23 billion (approximately $910 million), contributing more than half of total fee income. The increase reflects deeper advisory penetration across affluent, private and commercial banking segments as deposits convert into investment portfolios, structured solutions and treasury hedging mandates. Goh highlighted the link between client activity and income growth. “Wealth management fees and customer flow treasury income hit new highs, reflecting increased client activities and franchise strength.” Treasury execution forms another stage in the conversion process. Currency and interest rate hedging solutions generate customer flow income, while structured investment products produce advisory and transaction fees. Improved client sentiment and higher assets under management (AUM) across wealth segments, combined with a strategic focus on increasing relationship managers and digitalisation, boosted performance. Coverage expansion and digital enablement strengthened productivity across the wealth franchise as the bank increased relationship manager coverage and expanded its digital advisory capabilities. These initiatives supported higher invested assets under management and stronger wealth management fees. Greater advisory engagement therefore improved the conversion of client deposits into investment mandates, contributing to higher fee income across the expanding deposit base. Wealth and insurance offset margin compression Declining lending margins placed pressure on interest income during the year. Net interest income fell 6% to SGD 9.15 billion (approximately $6.8 billion) and net interest margin stood at 1.91%. Expansion in wealth management and insurance income therefore provided the quantified offset that sustained overall profitability. Wealth management income rose 14% to SGD 5.60 billion (approximately $4.1 billion), accounting for 38% of total income compared with 34% a year earlier. Banking assets under management increased 15% to SGD 343 billion (approximately $254 billion), supported by SGD 27 billion (approximately $20 billion) in net new money inflows. These figures demonstrate how deposit accumulation and advisory engagement translate into recurring fee income across the bank’s integrated wealth franchise. Insurance earnings added another structural contributor to profitability. Great Eastern, the group’s insurance subsidiary, contributed SGD 1.13 billion (approximately $837 million) in profit, up 28%, supported by stronger product mix and operating performance. New business embedded value increased 19% and margins improved to 48.2%, reinforcing underwriting economics retained within the group. Protection planning therefore complements portfolio advisory by embedding long-duration insurance income within the group’s wealth ecosystem. OCBC’s integrated franchise, combining banking, wealth, and insurance, enables a seamless Whole-of-Wealth offering. A dedicated Wealth Management Committee now coordinates execution across client segments and product lines. Balance sheet growth enables advisory conversion Customer loans grew 9% on a constant currency basis to SGD 341 billion (approximately $252 billion), while customer deposits rose 10% to SGD 428 billion (approximately $316 billion). Growth on both sides of the balance sheet expands the relationship base from which the group originates wealth mandates, treasury hedging activity and protection planning. Funding strength and capital resilience underpin this expansion. The fully phased-in common equity tier 1 ratio stood at 15.1%, and the non-performing loan ratio remained stable at 0.9%. These metrics demonstrate that the bank maintains strong prudential buffers while expanding client activity across lending, advisory and protection businesses. Operating discipline reinforced the bank’s financial resilience. Operating expenses rose 2% to SGD 5.88 billion (approximately $4.4 billion), keeping the cost-to-income ratio at 40.2%. Banking operations profit before tax declined 2% to SGD 7.65 billion (approximately $5.7 billion) as net interest income moderated. The growth in wealth management, insurance and customer flow treasury income offset this pressure at group level and demonstrates how diversified revenue streams sustain profitability during margin compression. Strategy embeds integration as operating direction OCBC’s Next Frontier strategy strengthens integration across banking, wealth, and insurance, leveraging regional connectivity to capture new opportunities from rising Asian trade and wealth flows. Tan positioned the strategy within long-cycle regional growth. “We have operated in ASEAN and Greater China for almost a century. With these deep insights, we want to capture new opportunities.” Technology functions as an enabling layer across this model. Tan explained that the bank approaches transformation through analytics, data and digital capabilities working alongside artificial intelligence to strengthen customer journeys and employee productivity. Artificial intelligence (AI) enhances portfolio analysis and operational workflows, speeding up response times and improving advisory precision. Tan clarified that the bank frames its transformation around Analytics, Data and Digital (ADD) rather than AI in isolation. “We want to view it holistically, focusing on customer journey and employee journey to achieve the synergies.” This framework ensures that digital tools enhance advisory precision while preserving the relationship model central to wealth monetisation. Earnings model shifts towards liquidity monetisation OCBC’s FY2025 performance demonstrates how diversified income streams can sustain profitability through interest rate transitions. Wealth income accounted for 38% of total income and insurance profit rose 28% even as net interest income declined, reinforcing earnings resilience beyond traditional lending spreads. The Whole-of-Wealth model links deposits, investments and insurance within a unified income system. As rate cycles evolve, earnings durability will depend on sustained advisory engagement, disciplined execution and continued improvement in conversion productivity. The shift towards liquidity monetisation is visible in the FY2025 results, and its persistence will determine whether this model becomes OCBC’s defining structural advantage.
