By Amanda Lee
Oversea-Chinese Banking Corp. remains cautious about the Middle East conflict even after the Singapore bank posted higher first-quarter net profit on record noninterest income.
The warning echoes larger rival DBS Group, which has also flagged an uncertain outlook, as Singapore's small, open economy, faces rising risks from the global energy shock.
"We remain very concerned about what's happening in the Middle East war, because [it has] a very direct impact on Southeast Asia in terms of energy supply and therefore the prices," Group Chief Executive Tan Teck Long said on an earnings call on Friday.
OCBC is also closely monitoring the trade tariff situation, Tan said.
Still, the bank maintained its 2026 guidance, including its target for mid-single-digit loan growth.
OCBC's capital position remains strong and provides a buffer against uncertainty, Tan said.
His comments came shortly after Singapore's second-largest lender by assets reported higher net profit for the three months ended March. Net profit rose 4.8% from a year earlier to 1.97 billion Singapore dollars, equivalent to US$1.55 billion, while total income increased 4.7% to S$3.83 billion.
Net interest income--the difference between what banks earn on loans and pay on deposits--fell5.2% to S$2.22 billion amid a lower interest-rate environment, the bank said.
Noninterest income climbed 23% to S$1.61 billion, driven by its wealth business.
The bank's wealth business is diverse and draws demand from around the world, Tan said, adding that Singapore's attractiveness as a wealth hub remains an advantage.
OCBC's shares recently hit record highs, supported by resilient earnings. The stock rose as high as 3.1% to S$22.56 in Friday morning trade before trimming gains.
The bank earlier this week announced the acquisition of HSBC's retail banking and wealth management operations in Indonesia. Indonesia remains a very important market for OCBC, Tan said, noting that Asean is still a very good place to be in right now.
Singapore banks could benefit from the war in the Middle East, with wealth management likely to outperform other segments amid risk-off sentiment.
As investors seek safer assets, capital could flow out of the Middle East into Singapore or Hong Kong, CGS International analyst Tay Wee Kuang said in a recent email. All three Singapore banks have operations in both cities and could see a boost in wealth-management fee income.
Wealth-management fees have become a key earnings driver for DBS, OCBC and United Overseas Bank as lower interest rates weigh on interest income.
Write to Amanda Lee at amanda.lee@wsj.com
(END) Dow Jones Newswires
May 07, 2026 23:25 ET (03:25 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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