Oversea-Chinese Banking Corporation (O39) Q4 2024 earnings summary

Executive summary

• Net profit for FY24 reached S$7.59 billion, up 8% year-over-year, driven by strong growth in banking, wealth management, and insurance income.

• Total income surpassed S$14 billion for the first time, with net interest income at S$9.76 billion (+1%) and non-interest income up 22% to S$4.72 billion.

• Wealth management income and AUM both achieved double-digit growth, with AUM rising 14% to S$299 billion.

• Insurance profit contribution from Great Eastern rose 39% to S$882 million, with insurance PBT up 34% to S$1.19 billion.

• Announced a S$2.5 billion capital return plan over two years, including special dividends and share buybacks, with a 60% dividend payout ratio for FY24 and FY25.

Financial highlights

• Net interest margin declined 8 basis points to 2.20% due to higher funding costs and increased allocation to high-quality, lower-yielding assets.

• Loans grew 8% year-over-year to S$319 billion, exceeding guidance, with notable increases in housing, trade, and sustainable financing loans.

• Customer deposits rose 7% to S$391 billion, with a CASA ratio of 48.8%.

• NPL ratio improved to 0.9%, and total NPA coverage increased to 159%.

• Operating expenses rose 10% year-over-year to S$5.74 billion, with a cost-to-income ratio of 39.7%.

Outlook and guidance

• 2025 guidance includes mid-single-digit loan growth, cost-to-income ratio in the low 40s, and credit costs of 20–25 basis points.

• Net interest margin expected to trend lower to around 2.0% in 2025, factoring in anticipated Fed rate cuts and increased allocation to high-quality assets.

• Dividend payout ratio of 60% to be maintained for 2025, with a combination of ordinary and special dividends.

• Management remains cautiously optimistic on regional growth, citing a robust franchise and strong capital position.

• Plans to continue strategic investments and maintain agility amid geopolitical and macroeconomic uncertainties.