OCBC remains stable amidst strong credit fundamentals: Moody's

This will be backed by healthy credit standing.

OCBC will remain stable at least until next year amidst projected strong credit fundamentals in 2024-2025, according to Moody’s.

In its latest rating report, Moody’s said “OCBC's problem loans ratio will remain below 2% of gross loans over that horizon, its core capital ratio will decrease slightly, and the bank's profitability will remain high with return on assets of around 1.1%-1.2%.”

The bank’s liquidity and funding, as well as capital buffer, are also seen to remain robust in the coming months.

Moody’s said OCBC’s tangible common equity to adjusted risk-weighted assets and Common Equity Tier 1 ratio will remain stable in 2024-2025. These stood at 20% and 15.9% at end-2023, respectively.

The bank’s return on assets is also projected to remain at a good level of around 1.1%-1.2% in 2024-2025, albeit lower than 1.25% in 2023, amid net interest margin compression driven by easing monetary policies.

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“OCBC's funding and liquidity will remain significant credit strengths. OCBC will maintain its strong deposit-led funding with low reliance on market funds whilst keeping a high buffer of liquid assets at around 30% of total assets,” Moody’s explained.

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