By Yantoultra Ngui
SINGAPORE (Reuters) -Oversea-Chinese Banking Corp (OCBC) said tariff uncertainty was likely to persist despite fresh deals struck by U.S. President Donald Trump, as the bank cut its 2025 net interest income expectations after a 7% drop in second-quarter net profit.
OCBC, Singapore and Southeast Asia’s second-largest bank, on Friday 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, matching the mean estimate of nearly S$1.82 billion from three analysts polled by LSEG.
The decline was mainly due to lower net interest income.
OCBC expected its 2025 net interest income to be lower by a mid-single-digit percentage and projected its net interest margin, a key gauge of profitability, to be in the range of 1.90% to 1.95% versus around 2% targeted in the previous quarter.
The bank maintained the rest of its 2025 financial targets.
“The uncertainty is still there,” OCBC Group CEO Helen Wong said in a briefing after the bank’s earnings announcement, referring to the evolving tariff landscape.
“There is still China coming up, and last night we see a few more conclusions,” she said. “Even if the tariff situation of China has been announced, it doesn’t mean that we won’t stop looking at the impact, so it is an ongoing process.”
Wong, the first woman to head the bank, will retire at the end of this year. Tan Teck Long, OCBC’s deputy CEO and head of global wholesale banking, will succeed her.
Tan said that the full ripple effect of tariffs, such as the high levies on Chinese goods, had not yet played out, but was already creating a surge of Chinese products into other markets and hurting local businesses.
However, he added that import-reliant sectors especially in Singapore, such as construction, were benefiting from a decline in the price of raw materials.
OCBC is the first Singaporean lender to announce results this earnings season. 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 boosted by the strong performance of its wealth and markets businesses.
HSBC Holdings, meanwhile, reported on Wednesday a sharper-than-expected drop in profit in the same period, pressured by write-downs from exposures to a Chinese bank and Hong Kong real estate.
Wong said while OCBC did not see significant weaknesses in its portfolio, Hong Kong commercial real estate remained a sector that it was monitoring closely. The bank was working with customers to support them, she added.
Despite the profit dip, OCBC’s non-interest income grew 5% year-on-year, lifted by better fee and trading income. Its wealth business’ assets under management expanded by 11% to a record high of S$310 billion, driven by net new money inflows and positive market valuation.
Return on equity fell to 12.3% from 14.2% a year earlier, while its net interest margin slipped to 1.92% from 2.20%. OCBC declared an interim dividend of 41 Singapore cents.
Rivals DBS Group and United Overseas Bank are scheduled to report their earnings on August 7.
($1 = 1.2974 Singapore dollars)
(Reporting by Yantoultra Ngui; Editing by Jacqueline Wong, Stephen Coates and Kate Mayberry)
