Oversea-Chinese Banking Corporation’s (OCBC) has posted record full-year net profit of $7.59 billion for FY2024 ended Dec 31, 2024, up 8% y-o-y. This was, however, 1.4% below consensus estimates.

Group net profit was driven by robust income growth across its three key businesses and lower allowances, says OCBC in a Feb 26 announcement. Total income surged above $14 billion for the first time, fuelled by record net interest income, and strong non-interest income propelled by a rise in wealth fees, a new high in trading income and an increase in insurance income. 

Asset quality remained sound with the non-performing loan ratio at 0.9%, says the bank.

The board has announced a “comprehensive approach” to return $2.5 billion of capital to shareholders over two years via special dividends and share buybacks. 

The capital return comprises special dividends amounting to 10% of the group’s net profit for FY2024 and FY2025, with the balance via share buybacks over two years, “subject to market conditions and regulatory approvals”. 

Together with OCBC’s target ordinary dividend payout ratio of 50%, the total dividend payout for FY2024 and FY2025 will amount to 60% annually. 

For FY2024, a final ordinary dividend of 41 cents per share is proposed, bringing the total ordinary dividend to 85 cents per share, or payout ratio of 50%. 

The board is also recommending a special dividend of 16 cents per share, or a payout ratio of 10% at the upcoming 2025 Annual General Meeting. 

This will bring the FY2024 total dividend payout to 60% of net profit. 

During FY2024, net interest income rose to a new high of $9.76 billion, underpinned by a 5% increase in average assets from customer loans, and high-quality assets which were income accretive but lower yielding. 

Net interest margin (NIM) was 8 basis points lower at 2.20%, as the rise in funding costs outpaced the increase in asset yields.  

Non-interest income growth was broad-based, rising 22% to $4.72 billion. 

Net fee income increased 9% to $1.97 billion, bolstered by a 22% rise in wealth management fees across all wealth channels. 

Investment banking and loan-related fees were also higher. 

Net trading income surged 53% to $1.54 billion. Customer flow treasury income rose to a new high, underpinned by both consumer and corporate segments. Non-customer flow treasury income more than doubled from a year ago, lifted by strong investment performance from OCBC’s Global Markets segment and Great Eastern Holdings (GEH). 

Insurance income grew 14% to $917 million, led by higher income from the underlying insurance business and improved claim experience. 

Total weighted new sales rose 8% to $1.80 billion, while new business embedded value (NBEV) was $622 million. 

OCBC’s wealth management income, comprising income from private banking, premier private client, premier banking, insurance, asset management and stockbroking, increased 13% to a record $4.89 billion. 

Group wealth management income accounted for 34% of total income, up from 32% in the previous year. 

Banking wealth management AUM rose 14% to a new high of $299 billion, driven by net new money inflows and positive market valuation.

Operating expenses grew 10% to $5.74 billion as the Group continued to invest in strategic initiatives and pursue business growth. 

Staff costs were higher, mainly attributable to headcount increase, higher variable compensation in line with income growth, as well as from annual salary increments. 

The increase in expenses was also partly due to the consolidation of PT Bank Commonwealth from May 2024, which was fully integrated into OCBC Indonesia in September 2024. 

Cost-to-income ratio for FY2024 was 39.7%.

Total allowances were 6% lower at $690 million, and total credit costs of 19 basis points of loans were below the previous year’s 20 basis points. 

Share of results of associates rose 4% to $994 million, from $953 million a year ago.

The Group’s return on equity of 13.7% was comparable to FY2023, and earnings per share was 8% higher at $1.67. 

4QFY2024

For 4QFY2024, group net profit of $1.69 billion was 4% higher y-o-y but 15% lower q-o-q. This was partly attributable to lower insurance income due to a negative impact from changes in the medical insurance environment in GEH’s key markets.

Net interest income rose 1% from the previous quarter to $2.46 billion, primarily attributable to a 2% increase in average assets, which more than offset a 3 basis-point decline in NIM.

Loans

Customer loans grew 8% from a year ago to $319 billion as at Dec 31, 2024, lifted by loan growth across the group’s core markets and key international markets. 

Loan growth for the year was broad-based across all industries and was driven by housing loans, as well as trade and non-trade corporate loans. 

The increase in non-trade corporate loans included lending to the technology, digital infrastructure, energy and transportation sectors. 

Sustainable financing loans rose 31% y-o-y to $50 billion and accounted for 16% of group loans, while total commitments increased 27% to $71 billion.

As at Dec 31, 2024, customer deposits rose 7% from a year ago to $391 billion, from higher current account and savings account (casa) and fixed deposits. 

Loans-to-deposits ratio was 80.7%, as compared to 80.5% a year ago.

The group’s common equity tier-1 capital adequacy ratio (CET-1 CAR) is subject to the Monetary Authority of Singapore’’s (MAS) final Basel III reforms requirements, which came into effect on July 1, 2024 and are being progressively phased in between July 1, 2024 and Jan 1, 2029. 

Group CET-1 CAR as at end-2024 was 17.1%, and was 15.3% on a fully phased-in basis.

“I am pleased to report that OCBC has delivered a record profit for the third year in a row. Our well-diversified banking, wealth management and insurance franchise all contributed to total income reaching an all-time high this year,” says Group CEO Helen Wong. 

“We deployed capital to increase our stake in Great Eastern Holdings (GEH) to 93.72%. GEH has significantly contributed to OCBC’s performance and is a strategic pillar of OCBC’s wealth management business, while OCBC has provided GEH access to our extensive retail and commercial customer base. We also successfully integrated PT Bank Commonwealth, which strengthened our customer and talent base in Indonesia,” she adds. 

The bank has set out a comprehensive plan to deliver capital returns through a combination of ordinary and special dividends, as well as share buybacks, notes Wong. “This signifies our confidence in driving OCBC’s long-term growth, while affirming our commitment to rewarding our shareholders for their continued support of OCBC.”

Wong remains “cautiously optimistic” on the regional growth outlook and says the bank is poised to seize growth opportunities as they arise. “We will remain agile in navigating the increasingly complex geopolitical landscape, and volatile macroeconomic environment. We firmly believe our collective strength as One Group is key to steering OCBC to greater heights. With OCBC’s well-established franchise, prudent risk management and robust capital, we are confident in our ability to continue delivering strong results and long-term value to all stakeholders.”

OCBC shares closed 9 cents lower, or 0.51% down, at $17.60 on Feb 25.