Singapore's OCBC Bank beat profit expectations for the third quarter and raised parts of its 2026 outlook, even as its insurance arm Great Eastern weighed on results with weaker investment returns.
The lender reported net profit of S$2.04 billion for the July–September period, up 3% from a year earlier and just ahead of the S$2.01 billion average analyst estimate compiled by LSEG. The beat was driven by loan growth that lifted net interest income, the money a bank earns from lending.
A quarter of mixed signals
But the quarter was a tug-of-war. OCBC's net interest margin – the spread between what it earns on loans and pays on deposits – fell 18 basis points. Other income lines also softened: trading income dropped 10% and insurance income slid 37%.
Much of that came from Great Eastern, which took mark-to-market losses on bonds and didn't repeat earlier equity gains. Mark-to-market means valuing assets at their current market price, so falling bond prices can hurt earnings even if the bank doesn't sell them.
Still, OCBC said banking wealth management income excluding Great Eastern rose 2% to a record S$1.12 billion, showing that its core banking business remained resilient.
Forward-looking guidance brightens
The bigger signal was forward-looking. OCBC raised its 2026 loan growth forecast to low double digits and cut its expected credit-cost range to 15–20 basis points from 20–25. Credit costs are a shorthand for how much a bank expects to set aside for future bad loans. Lower expected credit costs usually mean lower loan-loss provisions, which run straight through the income statement and can swing bank earnings more than modest quarter-to-quarter moves in net interest margin.
Pair that with a higher 2026 loan-growth target, and OCBC is saying it expects to lend more without taking on as much extra credit pain as previously suggested. In a quarter where peers also saw trading income weaken, that combination can support stronger medium-term profit forecasts, even if Great Eastern's investment results keep non-banking income choppy.
Management also flagged risks tied to the Middle East conflict, energy prices, and Indonesia, a key market for the bank.
What it means for investors
OCBC's update landed at the end of Singapore's big-bank earnings season, after DBS and UOB both pointed to weaker trading income. Against that backdrop, a small beat plus more upbeat guidance stood out.
For investors, the 15–20 basis-point credit-cost guide may matter more than the 18 basis-point margin slip. Lower expected credit costs can change how analysts model future profits, potentially supporting higher earnings estimates for 2026.
However, the drag from Great Eastern is a reminder that insurance income can be volatile. Investors should watch whether bond markets stabilise and whether OCBC can maintain its loan growth without a rise in bad loans.
OCBC's results come as other companies have also adjusted their outlooks. For example, Airbnb raised its 2026 outlook on strong bookings, while Mattel trimmed its forecast on soft holiday demand. In the energy sector, EOG hit record output as oil prices lifted profits.
For everyday investors, OCBC's update is a reminder that a bank's earnings can be influenced by many moving parts – from interest rates to insurance investments. The key takeaway is that OCBC expects to lend more and set aside less for bad loans, which could be a positive sign for its future profitability.
