Singapore's leading banks OCBC and UOB reported stronger-than-expected second-quarter earnings on Friday, supported by robust growth in wealth management and fee-based businesses that helped offset pressure on lending income from lower interest rates, according to Reuters.
The results reinforce a broader trend among Singapore-based lenders, where expanding wealth management operations have become an increasingly important source of earnings as net interest margins come under pressure.
OCBC Posts Record Quarterly Profit
Singapore's second-largest lender, OCBC, reported a record quarterly net profit of S$2.22 billion, up 22% from a year earlier and well ahead of the S$1.93 billion average analyst estimate compiled by LSEG, Reuters reported.
The bank also upgraded its loan growth outlook, now expecting lending to expand at a high-single-digit to low-double-digit pace this year, compared with its earlier guidance for mid-single-digit growth.
Growth was driven by a sharp increase in non-interest income, which climbed 51% year-on-year to S$1.91 billion during the quarter. Fee income rose 28%, trading income surged 85%, while insurance income increased 68%.
Wealth Management Continues to Drive Growth
According to Reuters, OCBC's wealth management business continued to deliver strong results, with first-half wealth management income rising 27% to a record S$3.29 billion. Banking assets under management also increased 13% to S$350 billion.
The bank said its strong capital position, diversified revenue streams and disciplined risk management leave it well placed to navigate market uncertainty while pursuing long-term growth opportunities.
UOB Beats Estimates Despite Lower Fee Growth Outlook
Singapore's third-largest bank, UOB, posted a 10% increase in second-quarter net profit to S$1.48 billion, exceeding the S$1.40 billion average analyst estimate from LSEG.
However, the bank lowered its forecast for fee income growth in 2026 to the low single digits, compared with its previous expectation of high single-digit growth. Reuters noted that UOB did not provide a reason for the revision.
Net fee income rose 5% to S$665 million, supported by record wealth management fees. Wealth management income for the first half increased 16%, with particularly strong growth across Malaysia, Indonesia, Thailand and Vietnam, where income expanded 30%.
UOB said its diversified business model and expanding presence across ASEAN markets continued to support earnings growth.
Lower Interest Rates Pressure Lending Margins
Despite the earnings strength, both lenders reported weaker net interest margins (NIMs), reflecting the impact of lower interest rates on lending profitability.
Lower margins have become a common challenge for banks as falling interest rates reduce the spread between lending income and funding costs.
Singapore Strengthens Position as Regional Wealth Hub
Reuters said the results extend a strong run of wealth-related earnings across Singapore's banking sector. Earlier this week, DBS, along with Asia-focused lenders HSBC and Standard Chartered, also reported rising income from serving affluent clients.
The trend highlights Singapore's growing appeal as a regional wealth management hub, benefiting from volatile global markets and ongoing geopolitical uncertainty that have encouraged high-net-worth individuals to diversify assets into the city-state.
Outlook and Shareholder Returns
OCBC's improved lending outlook reflects growing confidence in credit demand despite the lower-rate environment. Meanwhile, UOB maintained its forecast for low-single-digit loan growth this year and expects its full-year net interest margin to remain between 1.75% and 1.80.
Both banks also announced higher interim dividends for shareholders. OCBC increased its interim dividend to 47 Singapore cents per share from 41 cents, while UOB raised its interim dividend to 88 Singapore cents per share from 85 cents, Reuters said.
