---
endpoint: analytics
pattern: Financial Services
status: done
latency_ms: 355912
conversation_id: 7a429a70-4e2f-4a54-b616-0c70df9ab93a
citations: 10
created: 2026-05-31 19:35:45Z
---

# Provide a one‑year narrative of OCBC, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# OCBC (O39 SP) — One-Year Narrative (Aug 2024 → May 2025)

The arc compresses into three acts: a high-rate cycle that pushed OCBC to a record FY24 NPAT and a major capital-return announcement; a January–March stretch in which the stock rerated toward S$17.85 on yield, capital-return and "safe haven" buying; and an April–May reset in which falling SORA, Trump's "Liberation Day" tariffs and a sharp 1Q25 NIM disappointment took it from "Outperform" to "Hold" at CLSA and from "Buy" to "Hold/Neutral" at multiple Street brokers, leaving the stock range-bound and well behind UOB and DBS in investor preference.

---

## Act 1 — Aug–Nov 2024: Record-quarter momentum, optimistic management, rerating still ahead

**2Q24 result (1 Aug 2024) — clean beat, "Maintain O-PF, TP S$15.70".** 2Q24 NPAT was S$1.94bn (+14% YoY, –2% QoQ off an all-time-high 1Q), 10% ahead of CLSA's estimate and 4% ahead of consensus, driven by higher-than-expected trading income (~80% customer-driven) and low cost growth (C/I 37.5%) [1]. NIM ticked 7bps lower QoQ to 2.20% as funding costs ran ahead of asset yields, but loan growth was +1% QoQ and CASA improved to 47.9% [2]. NPL was stable at 0.9%, total credit costs eased to 15bps, CET1 was a robust 15.5% (14.7% post 1H interim dividend) and ROE printed 14.2% [3]. Interim DPS was raised 10% YoY to S$0.44 (50% payout) [1]. The stock was at ~S$15.2 with a 12M relative-to-STI reading of ~104, i.e. a relatively quiet outperformer entering 2H24.

**Sector context (26 Aug 2024).** CLSA characterised this as another strong sector quarter — "DBS and OCBC beating Street expectations with UOB in line", with all three on track for record NPAT and management teams "locking into long-tenure, high-yield assets" to manage falling-rate exposure. Order of preference shifted to DBS, UOB, OCBC (previously UOB, DBS, OCBC), foreshadowing OCBC's relative slide later. (CLSA, "Singapore banks — Working the duration on liabilities", 26 Aug 2024).

**OCBC at CLSA Investors' Forum (10 Sep 2024).** Management met ~33 investors from 29 firms — discussion centred on NIM, asset quality, wealth growth and capital management. Tone was "optimistic on the medium term outlook but somewhat cautious in the near term as market uncertainty from geopolitical tensions are unpredictable" [4]. Two operational disclosures stood out:
- **Rate-cut defense:** management had been pushing customers to fixed-rate mortgages — the fixed-rate share had moved from ~20% pre-hike cycle to "close to 60%". NII rate-cut sensitivity was guided at ~S$4m per 1bp; FY24 NIM was being pointed to the "lower end" of the 2.20–2.25% guidance [5].
- **China property exposure:** Mainland China CRE was only ~S$7bn of the S$304bn book, and 90% of the total book was non-CRE — the legacy Wing Hang acquisition was framed as the source of underwriting discipline in Greater China [6].
CLSA kept "Outperform" and the S$15.70 target, expecting a new record NPAT year despite incoming rate cuts.

**3Q24 result (8 Nov 2024).** 3Q24 NPAT was S$1.97bn (+9% YoY, +2% QoQ), beating CLSA by ~21% and the Street by 4%; 9M24 NPAT had run to ~85% of CLSA's FY24 number. NIM eased 2bps to 2.18%, loan growth was a weak 0.5% QoQ but inside the low-single-digit guide, credit costs ticked up to 22bps (in the 20–25bps guidance) and NPL was stable at 0.9%. Non-II carried the quarter — wealth fees +15% QoQ and trading +42% QoQ [7]. The stock had moved from ~S$13.2 (Nov-23) to a 12M-absolute return of +20.8% and 12M-relative-to-STI +4.3 [7]. Rating stayed O-PF, target S$15.70.

---

## Act 2 — Dec 2024 → Feb 2025: Rerating, record FY24, and the S$2.5bn capital-return announcement

CLSA's late-2024 strategy pieces ("Pivot to Reits, industrials, internet", 29 Nov 2024; "FY25 outlook redux", 9 Jan 2025) kept OCBC inside the Singapore coverage list, and "Transfer of coverage" (10 Jan 2025) handed the file from Daxin Lin to Marcus Liu, setting up the more bearish posture that followed.

**4Q24/FY24 result (26 Feb 2025) — the high-water mark.** FY24 NPAT grew 8% to a record S$7.6bn (8% above CLSA, 1% below consensus). Total income hit a record S$14.5bn (+7% YoY) on the back of record NII, a rise in wealth fees, a new high in trading income, and higher insurance income. FY NIM was 2.20% (–8bps YoY, in line with guidance), C/I 39.7% (better than expected) and credit costs 19bps (in line) [8]. The headline event was capital management: a final DPS of S$0.41 plus a special of S$0.16 took FY24 DPS to S$1.01 (60% payout ratio) and management unveiled a **S$2.5bn capital-return package over two years via special dividends and share buybacks** [8].

The quarterly P&L sequence below captures the full FY24 run [9]:

| S$m | 4Q23 | 1Q24 | 2Q24 | 3Q24 | 4Q24 | FY24 |
|---|---|---|---|---|---|---|
| NII | 2,462 | 2,437 | 2,430 | 2,433 | 2,455 | 9,755 |
| NIM (%) | 2.29 | 2.27 | 2.19 | 2.18 | 2.15 | 2.20 |
| Non-II | 811 | 1,189 | 1,199 | 1,369 | 961 | 4,718 |
| C/I (%) | 40.0 | 37.1 | 37.8 | 38.5 | 45.7 | 39.7 |
| Impairments | (187) | (169) | (144) | (169) | (208) | (690) |
| NPAT | 1,622 | 1,982 | 1,944 | 1,974 | 1,687 | 7,587 |

The sequence shows the central tension that the market would later seize on: NIM was sliding (2.29% → 2.15% over FY24), and 4Q24 NPAT had already softened to S$1.69bn even as record annual numbers and big capital-return optics dominated headlines. As of Feb-25, 12M absolute share-price performance was a stand-out +31.6% and 12M hi/lo was S$17.85/12.98.

---

## Act 3 — Apr–May 2025: "Liberation Day", NIM shock, and the downgrade trifecta

### The macro turn
The Trump "Liberation Day" tariff announcement in early April 2025 hit Asian financials with a sharp sell-off. CLSA characterised Singapore banks as a "lower beta shelter in turbulent times" with past crises showing "sharp sell-offs often presenting good buying opportunities for longer-minded investors" — but the sell-off and rapid rebound exposed differences in rate sensitivity and yield support between the three names. Singapore banks' 12M leg into April had already been strong (DBS +30%, OCBC and UOB +20%), so the question was less about absolute drawdown than relative positioning [11].

### CLSA's 7 Apr 2025 sector reset: OCBC cut to Hold
On 7 April 2025, CLSA published "Capital shelter" — the new analyst (Marcus Liu) formally **upgraded UOB to High-Conviction Outperform and downgraded OCBC to Hold**, with DBS held at O-PF. The reasoning was specific to OCBC's structural set-up:
- **Rate sensitivity:** OCBC was "likely to see most pressure from lower rates in the coming years"; past crises had also seen its share price underperform peers [11].
- **Yield support:** OCBC had the lowest yield support, with 2025CL all-in payout yields (dividend + buyback) of 8.6%/7.0%/8.5% for DBS/OCBC/UOB respectively. Yield was now "the all-important capital return support" given expected rate cuts [11].
- **Capital-return ranking:** OCBC's S$2.5bn package (including a S$1bn buyback and a 10% special payout taking total to 60% of profit) was generous in absolute terms but trailed DBS's S$3bn buyback + quarterly specials and UOB's S$3bn package (S$2bn buyback + S$0.50 special in FY25) [10][12].

### Other brokers acted before CLSA's downgrade — and one upgraded
The April broker action shows a market reassessing the name:
- **14 Apr — UOB Kay Hian upgraded to Buy** (TP S$16.90, +11% upside) [29]
- **22 Apr — RHB Research downgraded to Neutral from Buy** (TP cut to S$17.50 from S$19.10) [28]
- **23 Apr — CGS International downgraded to Hold from Add** (TP cut to S$17.20 from S$19.50) [27]
- **25 Apr — Ex-dividend trading day: O39.SP fell -4.0% on large trades** [30]

By 23 April CLSA framed the upcoming results as a haven play: "supportive yields a key attraction… growth and margin expectations are likely to be reduced but the all-important capital return support should remain intact". Order of preference remained UOB > DBS > OCBC. (CLSA, "Singapore banks — Yield wield", 23 Apr 2025.)

The Street's pre-print consensus was that "Q1 to mark the beginning of a more pronounced phase of NIM compression… OCBC is likely to see the steepest NIM contraction given its higher sensitivity" [26].

### 1Q25 result (9 May 2025) — the NIM shock that defined the year
The headline numbers were a beat — NPAT S$1.88bn vs StreetAccount S$1.83bn, with total income S$3.66bn and NII S$2.35bn — but the texture disappointed [24]. CLSA's recap was blunt: "Like its peers before it, OCBC reported a decent start to the year, underpinned by strong non-II, driven by wealth, trading and insurance. Loans were up a similar amount to peers, though an **11bps QoQ contraction in NIM is starkly inferior versus UOB (flat) and DBS (-3bps)**" [13].

Concrete 1Q25 mechanics [14]:
- NIM contracted 11bps QoQ to 2.04% (from 2.15% in 4Q24 and 2.27% in 1Q24) — loan yields tightened faster than deposit costs, compounded by deployment of liquidity into lower-yielding HQLA.
- Loans +0.9% QoQ vs deposits +3% QoQ, LDR 78.9% (down from 80.7%), CASA 48.9%.
- NPAT S$1.88bn was +12% QoQ but –5% YoY.

CLSA's 1Q25 P&L vs CLSAe / consensus [15]:

| | 1Q24 | 4Q24 | 1Q25CL | QoQ | YoY | A/CL | Cons | A/Cons |
|---|---|---|---|---|---|---|---|---|
| NII | 2,437 | 2,455 | 2,345 | -4% | -4% | 2,342 (0%) | 2,413 | -3% |
| NIM (%) | 2.27 | 2.15 | 2.04 | -11bps | -23bps | 2.08 | 2.10 | -6bps |
| Non-II | 1,189 | 961 | 1,310 | 36% | 10% | 1,241 (6%) | 1,225 | 7% |
| C/I (%) | 37.1 | 45.7 | 38.7 | -7ppt | 2ppt | 39.5 | 39.1 | – |
| Impairment | (169) | (208) | (212) | 2% | 25% | (296) | (305) | – |
| NPAT | 1,982 | 1,687 | 1,883 | 12% | -5% | 1,754 (7%) | 1,843 | 2% |

The cross-peer comparison made OCBC's NIM the standout negative of the print [16]:

| 1Q25 | DBS | OCBC | UOB |
|---|---|---|---|
| NIM | -3bps QoQ | **-11bps QoQ** | +0bps QoQ |
| Gross loans | +1.2% QoQ | +0.9% QoQ | +1.0% QoQ |
| Non-II YoY | +8% | +10% | +7% |
| Total income YoY | +6% | +1% | +4% |
| PiP YoY | +6% | -2% | +7% |
| Credit costs | 27bps | 24bps | 35bps |
| NPAT YoY | -2% | -5% | +0% |

Management nonetheless **reaffirmed all 2025 financial targets**: mid-single-digit loan growth, C/I in the low 40s, credit costs 20–25bps, and the 60% payout combined with the S$2.5bn capital-return programme [25]. By management's calculation, the first-order impact from trade tensions was ~3% of the book (slightly higher than DBS at 1–2% and UOB at 2%); trade-related loans were ~10% of book and SMEs ~9% [17]. Share-price reaction on the print was muted (+0.4% on results day, marginally trailing the STI +0.7%) [22].

### Post-print: CLSA retained Hold and lifted the TP modestly
On 13 May CLSA's "On the defensive" trimmed FY25–27 EPS by 2–4% on lower NIM assumptions but lifted the PE valuation anchor from "-1 std. dev." to the 10-year average of 9.4x — giving a new TP of **S$16.20 (from S$15.90)** while retaining **Hold** [18]. The takeaway was that "DBS and OCBC are close to fair value… though DBS is well supported by its strong yield… upside to valuations for UOB, which remains our top pick, supported by stronger earnings growth, robust yield and lower sensitivity to rates" — i.e. OCBC was now squeezed in valuation from both sides.

### Investor sentiment by mid-May
CLSA's marketing-feedback note "Stuck in neutral" (20 May 2025) reported investors as "near unanimous in their preference: DBS then UOB then OCBC". DBS's "perceived stronger management team and lower exposure to SMEs" were the primary draws; conversations on OCBC "understandably centred on NIM, given the 11bp contraction in 1Q25, in stark contrast to peers", with investors mostly in "wait-and-see mode" despite management's view that "the bulk of the contraction for this year is already done" [19][20]. The framing was "range-bound" — upside capped by valuation, downside limited by yield [21].

The Street's broader synthesis on 22 May echoed the same calibration: UBS regarded OCBC as "relatively more defensive, given higher provision buffers and cheaper relative valuations", UOB Kay Hian liked OCBC for "ASEAN focus", but CLSA flagged that "DBS remained preferred exposure among investors" while "concerns over OCBC on steeper NIM contraction" persisted [22]. Sell-side ratings on OCBC at that point: 39% Buy / 56% Hold / 6% Sell, with an average TP of S$17.04 (~4.2% upside from S$16.21) [23].

### The Great Eastern overhang
A non-banking irritant continued to run in parallel. **Great Eastern Holdings (OCBC's 88%-owned insurance arm) obtained an extension from SGX until 8 June 2025** to comply with listing rules — the dispute centres on free-float requirements after the failed take-private in 2024, and management has been "exploring various options… to formulate a proposal which can address the interests of stakeholders" [31]. While not a P&L event, this kept low-grade corporate-action noise around the OCBC complex through the spring.

---

## What shaped investor sentiment & valuation — the synthesis

**1. The thesis flipped from "highest yield + Greater China optionality + record NPAT" (Aug 2024–Feb 2025) to "highest rate sensitivity + lowest payout yield + NIM laggard" (Apr–May 2025).** OCBC was a top "haven" expression while NIM was holding the line near 2.20% and the S$2.5bn capital-return package was new news; once 3M SORA fell from ~3.62% in May 2024 to ~2.20% by May 2025 and 1Q25 NIM gapped to 2.04% (vs flat at UOB and –3bps at DBS), the same balance-sheet structure that had supported earnings on the way up became the central vulnerability on the way down.

**2. Capital return was generous in absolute terms but third-best in relative terms.** The S$2.5bn package (incl. S$1bn buyback, 10% special payout taking total to 60%) [10][12] still left implied 2025CL all-in yield at ~7.0% versus 8.6% (DBS) and 8.5% (UOB) [11]. In a market that was pricing payouts as the primary support, this gap drove the downgrade more than earnings.

**3. The catalyst path narrowed.** As of late May 2025, the bull case had collapsed to "Greater China expansion bearing fruit — OCBC Wing Hang plus partner tie-ups with entities like Ping An" [21] and management's view that NIM compression for the year was largely done [19]. Both are second-half stories, not Q2 catalysts.

**4. Valuation reset, not valuation collapse.** Across the year CLSA's TP moved S$15.70 → S$15.90 → **S$16.20**, while rating progressed O-PF → HLD; the stock did most of its rerating in mid-2024 to early-2025 (12M absolute return +31.6% as of Feb-25, with the stock topping out near S$17.85) before grinding sideways at S$16.21 in late May 2025 [9][20]. The market consensus average TP was S$17.04 (+4.2% upside) on 39%/56%/6% Buy/Hold/Sell [23] — i.e. a stock the Street now treats as fairly priced rather than expensively priced.

---

**Sources**
- [1][2][3] OCBC – O-PF (2Q24 business update first thoughts) — CLSA (1 Aug 2024) — 607935226LinqAlpha.PDF
- [4][5][6] OCBC – O-PF (OCBC at IF2024) — CLSA (10 Sep 2024) — 607939221LinqAlpha.PDF
- [7] OCBC – O-PF (3Q24 business update first thoughts) — CLSA (8 Nov 2024) — 607943747LinqAlpha.PDF
- [8][9] OCBC – O-PF (4Q24 business update first thoughts) — CLSA (26 Feb 2025) — 607951591LinqAlpha.PDF
- [10][11][12] Singapore banks (Capital shelter) — CLSA (7 Apr 2025) — 607955234LinqAlpha.PDF
- [13][14][15][16] OCBC – HLD (1Q25 business update first thoughts) — CLSA (9 May 2025) — 607958690LinqAlpha.PDF
- [17][18] Singapore banks (On the defensive) — CLSA (13 May 2025) — 607959041LinqAlpha.PDF
- [19][20][21] Singapore banks (Stuck in neutral) — CLSA (20 May 2025) — 607959993LinqAlpha.PDF
- [22] StreetAccount Sector Review — Singapore Banking Sector Q1 Earnings (22 May 2025)
- [23] StreetAccount — Street Takeaways: OCBC Q1 Earnings (14 May 2025)
- [24] StreetAccount — OCBC reports Q1 NPAT SG$1.88B vs SA SG$1.83B (8 May 2025)
- [25] StreetAccount — OCBC maintains 2025 financial targets; NIM ~2% (8 May 2025)
- [26] StreetAccount Sector Preview — Singapore Banking Sector Q1 (2 May 2025)
- [27] StreetAccount — OCBC downgraded to Hold from Add at CGS International (23 Apr 2025)
- [28] StreetAccount — OCBC downgraded to Neutral from Buy at RHB Research (22 Apr 2025)
- [29] StreetAccount — OCBC upgraded to Buy at UOB Kay Hian (14 Apr 2025)
- [30] StreetAccount — Singapore mid-day trading: O39.SP ex-dividend day, –4.0% (25 Apr 2025)
- [31] StreetAccount — Great Eastern Holdings obtains SGX-ST listing extension (23 May 2025)

## Citations

- [22] **StreetAccount Sector Review - Singapore Banking Sector Q1 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4281707&_doc_date=2025-05-22&_doc_product=SA>
- [23] **Street Takeaways - Oversea-Chinese Banking Corp. Q1 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4270835&_doc_date=2025-05-14&_doc_product=SA>
- [24] **Oversea-Chinese Banking Corp. reports Q1 NPAT SG$1.88B vs StreetAccount SG$1.83B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4263883&_doc_date=2025-05-08&_doc_product=SA>
- [25] **Oversea-Chinese Banking Corp maintains 2025 financial targets; NIM ~2%** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4263955&_doc_date=2025-05-08&_doc_product=SA>
- [26] **StreetAccount Sector Preview - Singapore Banking Sector Q1 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4259382&_doc_date=2025-05-02&_doc_product=SA>
- [27] **OCBC downgraded to hold from add at CGS International** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4230441&_doc_date=2025-04-23&_doc_product=SA>
- [28] **OCBC downgraded to neutral from buy at RHB Research** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4228945&_doc_date=2025-04-22&_doc_product=SA>
- [29] **OCBC upgraded to buy at UOB Kay Hian Securities** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4224019&_doc_date=2025-04-14&_doc_product=SA>
- [30] **Singapore mid-day trading: O39.SP ex-dividend day, large trades, -4.0%** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4235249&_doc_date=2025-04-25&_doc_product=SA>
- [31] **Great Eastern Holdings obtains SGX-ST listing extension until 8-Jun** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4284228&_doc_date=2025-05-23&_doc_product=SA>

