SINGAPORE - OCBC Bank posted a 7 per cent fall in earnings for the second quarter, as declining interest rates weighed on net interest income.
Net profit for the three months to June 30 came in at $1.82 billion, down from $1.94 billion a year earlier.
Still, the figure beat the $1.79 billion forecast by analysts in a Bloomberg poll.
The bank also declared an interim dividend of 41 cents per share, down from 44 cents a year ago. The interim dividend payout will amount to $1.84 billion, representing a payout ratio of 50 per cent.
Outgoing chief executive officer Helen Wong said that the outlook ahead remains challenging as evolving trade and monetary policies, and persistent geopolitical tensions are expected to weigh on growth prospects.
The bank forecasts global and regional growth to be slower from second half, but also expects its strong balance sheet and capital position to navigate volatilities.
OCBC maintained most of its 2025 financial targets, including mid-single-digit loan growth and credit costs in the range of 20 to 25 basis points. Net interest margin is expected in the region of 1.90 to 1.95 per cent, slightly down from the region of 2 per cent previously.
Banks are seeing their net interest margins squeezed with interest rates low or falling, as the difference between what they earn on loans and what they pay on deposits narrows.
Net interest income for the quarter fell 6 per cent to $2.28 billion, mainly owing to net interest margins coming in at 1.92 per cent, down from 2.2 per cent in the same period in 2024.
Non-interest income surged 5 per cent year on year to $1.26 billion, lifted by a 24 per cent rise in fee income and 6 per cent increase in trading income, which more than offset lower insurance income.
Wealth management fee income was $279 million, up from $212 million from a year earlier, and contributed 48 per cent to total income, up from 45 per cent a year earlier.
For the first half, net profit amounted to $3.70 billion, 6 per cent below the $3.93 billion in the previous year.
OCBC kicked off local banks' earnings season, with DBS and UOB slated to report on Aug 7.