Oversea-Chinese Banking Corp (OCBC), Singapore’s second-largest lender, has forecast a slowdown in loan growth for 2025 following a weaker-than-expected rise in fourth-quarter earnings. The bank also announced an SGD2.5bn ($1.87bn) capital return plan, Reuters reported.

OCBC was the only major Singaporean bank to fall short of analysts' projections during an otherwise strong earnings season, as its peers unveiled substantial capital return initiatives that propelled their stock prices to record levels.

Group CEO Helen Wong expressed measured optimism about regional economic prospects, emphasising the bank’s readiness to capitalise on emerging opportunities despite geopolitical and macroeconomic uncertainties. The lender expects mid-single-digit loan growth for 2025, a decline from the 8% expansion achieved in 2024, which exceeded its initial target.

The bank also anticipates a compression in its net interest margin, projecting a decline to approximately 2% in 2025 from 2.2% the previous year. The capital return initiative includes special dividends amounting to 10% of net profit for 2024 and 2025, with the remainder allocated for share buybacks over two years, contingent on market conditions and regulatory approval.

OCBC’s fourth-quarter net profit rose to SGD1.69bn from SGD1.62bn a year earlier, buoyed by stronger non-interest income from fees, trading, and insurance. However, the result fell short of analysts' median estimate of nearly SGD1.81bn.

Competitor DBS Group reported a 10% rise in fourth-quarter net profit on February 10, aligning with expectations, while United Overseas Bank exceeded forecasts with a 9% profit increase and an SGD3bn capital return plan, driving both banks' shares to new highs.

Market analysts warn that economic growth in 2025 could face headwinds due to potential disruptions from U.S. trade policies under Donald Trump’s administration. Meanwhile, OCBC’s return on equity declined to 11.8% in the fourth quarter from 12.4% a year prior, while its net interest margin narrowed to 2.15% from 2.29% over the same period.

Earlier this year, OCBC introduced bespoke tokenised bonds tailored for corporate accredited investors, marking a first in Singapore's banking industry. Corporate accredited investors include entities with net assets exceeding $10mn, bno reported.