OCBC Raises 2026 Outlook as S$2.04 Billion Quarterly Profit Masks Stronger Banking Growth

Record banking profit offsets an insurance setback

OCBC raised its 2026 outlook on November 6 after reporting third quarter net profit of S$2.04 billion, up 3% from S$1.98 billion a year earlier. Behind that modest increase was a sharper contrast: banking operations earned a record S$1.9 billion, up 16%, while weaker investment results at insurance subsidiary Great Eastern held back the group.

Singapore's second largest bank also reported record net profit of S$6.24 billion for the first nine months of 2026, an increase of 10%. Stronger wealth management and wholesale banking businesses, low credit costs and higher profits from associates supported the performance.

The results for the three months ended September 30 exceeded the S$2.01 billion average forecast from four analysts in LSEG data. A separate survey of seven analysts had forecast S$2 billion. Both put expectations slightly below the reported result.

OCBC now expects loan growth in the low double digits for 2026 and lower credit costs than previously projected. Its outlook combines faster lending with a cautious assessment of geopolitical tensions, energy prices and conditions in Indonesia.

For shareholders, the central story is the gap between the bank's underlying operations and its insurance contribution. Excluding Great Eastern, total income rose 6% from a year earlier. Including the insurer, group total income fell 2%. Record income within banking operations therefore sat alongside a decline in revenue across the wider group.

How the latest quarter fits into the year

OCBC's S$2.04 billion quarterly profit was about S$60 million above the same period in 2025. It was also the second consecutive quarter with earnings above S$2 billion, although below the S$2.22 billion earned in the second quarter.

The sequence of announcements shows how the bank's expectations developed during 2026:

• June 30: The second quarter ended with net profit of S$2.22 billion. OCBC subsequently raised its annual financial guidance when announcing those results.
• September 30: The third quarter ended, bringing profit for the first nine months to a record S$6.24 billion.
• November 2: Great Eastern announced a 72% fall in third quarter net profit to S$102.9 million.
• November 6: OCBC announced its third quarter results and raised its annual guidance for the second time in 2026.

The quarterly and cumulative figures tell different parts of the story. Earnings grew 3% against the same quarter a year earlier, while the first nine months delivered growth of 10%. The annual improvement was stronger than the pace recorded in the latest quarter alone.

More lending lifts interest income despite a thinner margin

OCBC's net interest income rose 4% to S$2.31 billion, its highest level in six quarters. Customer loans increased 14% from a year earlier to S$372 billion, while customer deposits grew 12% to S$461 billion.

Net interest income is the money a bank earns from lending and other assets after subtracting the interest it pays for funding, including deposits. A larger pool of loans can increase that income even when each dollar of assets produces a smaller return.

OCBC's net interest margin fell to 1.66% from 1.84% a year earlier, a decline of 18 basis points. One basis point is one hundredth of a percentage point. The margin measures net interest income against the assets that generate interest.

Growth in customer loans and high quality noncommercial assets helped offset the narrower margin. Digital infrastructure and renewable energy were among the sectors supporting loan growth. Deposits also expanded, although more slowly than lending.

OCBC's annual forecast remains more restrained than its third quarter interest income growth. The bank expects net interest income for all of 2026 to be flat or decline slightly, an improvement from its previous forecast of a slight decline.

Wealth and fees strengthen the banking business

OCBC's banking wealth management income, excluding Great Eastern, rose 2% to a record S$1.12 billion. Wealth management assets under management increased 7% from a year earlier to S$358 billion.

Assets under management are the investments and other client assets that a financial institution manages. They give a sense of the size of the wealth business, while income measures what that business earns from its services and activities.

Fee income increased 8%, with growth across wealth management, lending, trade and investment banking activities. Wealth management fees accounted for more than 60% of total group fees, making the business a major source of earnings outside interest income.

Group chief executive Tan Teck Long said wealth management and wholesale banking were strong contributors to the results. Wholesale banking serves businesses and institutions through services such as lending, payments and trade finance.

Tan also described a more cautious mood among wealth customers during the results briefing:

(Wealth) customer investment sentiment has been cautious since July,

OCBC's record banking wealth income therefore came during a period when customers were becoming more careful about investing. Across the wider group, wealth management income fell 25% from the previous quarter because the measure also includes Great Eastern's weaker investment contribution.

Why Great Eastern weighed so heavily on earnings

Great Eastern's third quarter net profit fell 72% to S$102.9 million. Weaker investment valuations and a loss from the partial sale of its Indonesian subsidiary reduced its contribution to OCBC.

The insurer recorded losses as the market value of its bond portfolio declined. Large gains from equities in the second quarter were also absent in the third quarter. Together, these movements helped pull OCBC's insurance income down 37% from a year earlier.

Valuing investments at current market prices is often called marking them to market. When those prices fall, the change can reduce reported earnings, including when the insurer continues to hold the investments.

OCBC's total income outside interest fell 10% to S$1.42 billion, mainly reflecting Great Eastern's weaker investment performance. This explains why stronger fees and banking activity did not translate into equally strong growth across the group.

Tan said Great Eastern's underlying business remained resilient. New business embedded value rose 14% from a year earlier, supported by growth of more than 20% in Singapore's agency and bancassurance channels. Bancassurance means selling insurance through banks.

New business embedded value estimates the value of future profits from newly sold insurance business. Its increase showed progress in new policy sales and their expected profitability, alongside the immediate pressure from investment valuations.

Customer trading grows while investment activities lose money

OCBC's trading income declined 10% from a year earlier, but customer flow trading income rose 29%. Trading and investment activities outside customer flows recorded a S$15 million loss.

Customer flow trading covers transactions connected to client demand, such as currency transactions or products used to manage financial risks. Its growth showed stronger earnings from serving customers, even as other trading and investment activities weakened.

The contrast matters because OCBC had several businesses moving in different directions. Fees, lending and customer trading improved, while insurance investments and trading outside customer flows reduced revenue.

Operating expenses were unchanged from a year earlier. With costs steady, stronger banking income, low credit costs and higher associate profits helped banking operations lift profit by 16%, much faster than the group's 3% increase.

Fewer troubled loans support a lower credit cost forecast

OCBC's ratio of nonperforming loans declined to 0.8% from 0.9% a year earlier. The ratio measures the share of loans classified as troubled because borrowers are having difficulty meeting repayment obligations.

The bank now expects credit costs of 15 to 20 basis points in 2026. Credit costs are charges associated with expected lending losses, expressed relative to the loan portfolio. Lower charges leave more income available as profit.

The earlier forecast was generally given as 20 to 25 basis points, although a range of 25 to 30 basis points was also cited. The new range of 15 to 20 basis points represents a reduction against either figure.

Tan described a return to lending growth after a more restrained approach in the previous year. He said the bank continued to match its lending exposure conservatively in more vulnerable parts of the market.

For OCBC, the revised outlook brings together faster loan expansion and lower expected losses. Borrower performance will remain central to that combination, particularly as the bank adds lending in growth sectors while monitoring economic and market risks.

Energy prices, Indonesia and technology shape the outlook

OCBC raised its 2026 loan growth forecast to the low double digits, from a previous range spanning high single digits to low double digits. Total income is expected to grow by at least a mid single digit percentage.

Tan said the group's four core markets, Singapore, Malaysia, Hong Kong and Indonesia, continued to grow. He also warned that geopolitical tensions and elevated inflation risks were keeping global conditions uncertain.

At the results announcement, Tan identified energy prices and Indonesia as immediate areas of attention:

Much of the near-term outlook will depend on the easing of energy prices brought about by the war in the Middle East, while the market conditions in Indonesia are also being closely monitored,

OCBC was monitoring the possibility that index provider MSCI could move Indonesia from emerging market to standalone status. Such a change would remove the market from MSCI's major global benchmarks and could affect demand from investment funds that track those indexes. No date for a final decision was given.

Artificial intelligence and related technology sectors continued to show strong growth, Tan said. OCBC's exposure to data centres was less than 3% of its total loan book, while exposure to artificial intelligence was below 1%. The figures show the scale of those activities within a much larger lending business.

Shareholders face a changing capital return picture

OCBC plans to complete its S$2.5 billion capital return programme by the end of 2026. After that, it will return to an ordinary dividend payout ratio of 50%, meaning a policy of distributing half of the relevant earnings as ordinary dividends.

The bank's shares fell about 1% during trading on November 6, with a quoted price of S$27.67, as Asian markets declined following a sharp fall in technology and semiconductor shares on Wall Street. OCBC had closed the previous day at S$27.93.

OCBC completed the quarterly results season for Singapore's three main banks. DBS and UOB had posted profits below expectations, with weaker trading income weighing on their results, while OCBC exceeded forecasts.

The earnings comparison gives OCBC a stronger relative result for the quarter. Within its own business, the next task is to sustain lending and fee growth while managing the narrower interest margin and the investment volatility affecting Great Eastern.

Key Points

• OCBC's third quarter net profit rose 3% to S$2.04 billion, exceeding analyst forecasts.
• Banking operations profit increased 16% to a record S$1.9 billion; profit for the first nine months reached S$6.24 billion.
• Loans grew 14% to S$372 billion, helping net interest income rise despite a lower margin.
• Great Eastern's weaker investments reduced insurance income, while banking wealth income reached a record S$1.12 billion.
• OCBC raised its 2026 loan growth outlook to the low double digits and lowered expected credit costs to 15 to 20 basis points.
• The bank is monitoring energy prices, Indonesia and borrower risks as it completes its S$2.5 billion capital return programme.