Wealth fees hit a record as margin pressure mounts, but the bank is watching for second and third-order effects from the conflict on Southeast Asia’s energy-dependent economies
OCBC posted stronger than expected first-quarter results but took the unusual step of building precautionary provisions linked to the US-Iran conflict, setting it apart from Singapore’s other two listed banks this earnings season.
Net profit rose 5% year on year to S$1.97 billion for January to March, beating the mean analyst estimate of S$1.89 billion. The result was driven by record non-interest income and strong wealth management fees, which offset continued pressure on lending margins.
Despite no visible credit deterioration in its portfolio, OCBC set aside S$191 million in allowances for non-impaired assets, up from S$118 million a year earlier and a sharp reversal from a S$36 million write-back in the fourth quarter of 2025.
“To be prudent, although we don’t see credit quality issues in our portfolio, we have put in some general provisions for non-impaired loans,” said CEO Tan Teck Long. “It’s really a third-order effect which we are being prudent about.”
The bank’s direct Middle East exposure is limited, at under 3% of loans and less than 1% of total assets, including petrochemical and refinery-related lending. The concern is less about direct exposure and more about energy price shocks rippling through Southeast Asia’s growth outlook.
Wealth business picks up the slack
Net interest margin fell to 1.76% from 2.04% a year earlier, and net interest income declined 5% to S$2.22 billion. The shortfall was covered by non-interest income, which rose 23% to a record S$1.61 billion. Wealth management fees climbed 34% to S$422 million, with net new money inflows of S$5 billion for the quarter.
Tan said OCBC is targeting double-digit year-on-year growth in both wealth fees and assets under management, drawing on client flows from Singapore, Hong Kong and rising affluence across Southeast Asia.
OCBC maintained its full-year 2026 guidance. The results round out a broadly resilient quarter for Singapore’s three listed banks, though all are leaning more heavily on wealth, fees and treasury flows as falling rates erode traditional lending margins.