SINGAPORE, Aug 1 (Reuters) - Singapore's second-largest bank, Oversea-Chinese Banking Corp (OCBC), lowered its net interest income expectation for 2025 after posting on Friday a 7% year-on-year drop in second-quarter net profit that matched expectations.
"The outlook ahead remains challenging," said OCBC Group Chief Executive Helen Wong in a statement. "Evolving trade and monetary policies, and persistent geopolitical tensions are expected to weigh on growth prospects."
OCBC, Southeast Asia's second-largest lender, expected its 2025 net interest income to be lower by a mid-single-digit percentage and projected its net interest margin, a key profitability gauge, to be in the range of 1.90% to 1.95% versus around 2% targeted in the previous quarter.
It maintained the rest of its 2025 financial targets.
"Despite the uncertainties, OCBC has a strong and resilient franchise," Wong added. Wong, the first female to head the bank, will retire at the end of this year. Tan Teck Long, OCBC's head of global wholesale banking, will succeed her.
OCBC is the first Singaporean lender to kick-start this earnings season among the domestic banks. It follows other major global lenders which reported a mixed bag of results this week.
Standard Chartered reported on Thursday a higher-than-expected 26% jump in first-half pretax profit on the back of strong performance in the wealth and markets businesses.
HSBC Holdings, meanwhile, reported on Wednesday a sharper-than-expected drop in profit in the same period, weighed by write-downs from exposures to a Chinese bank and Hong Kong real estate.
OCBC posted net profit of S$1.82 billion ($1.40 billion) for the April-June period, down from S$1.94 billion a year earlier, mainly due to lower net interest income.
Non-interest income, meanwhile, grew 5% year-on-year, lifted by better fee income and trading income. Its wealth business' asset under management expanded by 11% to a record high of S$310 billion, driven by net new money inflows and positive market valuation.
This, however, matched the mean estimate of nearly S$1.82 billion from three analysts polled by LSEG.
OCBC, which counts Singapore, greater China and Malaysia among its key markets, declared an interim ordinary dividend of 41 Singapore cents.
Return on equity declined to 12.3% in the second quarter from 14.2% in the same period of 2024.
Net interest margin slipped to 1.92% during the quarter from 2.20% a year earlier.
Rivals DBS Group and United Overseas Bank are scheduled to report their financial results on August 7.
($1 = 1.2974 Singapore dollars)