OCBC: Tariffs Could Have Low Single Digit Impact on Loans

OCBC: Tariffs Could Have Low Single Digit Impact on Loans

Singapore-based OCBC outlined potential headwinds from tariff-related risks, including a low single digit impact on its loan book.

OCBC maintained its financial targets for 2025 including a net interest margin of 2 percent in the region, mid-single digit loan growth, a cost-income ratio in the low 40s, 20 to 25 basis points of credit costs, 60 percent dividend payout ratio and share buybacks of S$2.5 billion ($1.9 billion) over two years.

However, the loan growth goal could be affected if market uncertainty persists amid a trade war with unprecedented tariffs. According to OCBC CEO Helen Wong, tariffs are expected to have a «first order impact» of 3 percent on the bank’s loan book.

«[If] economic growth is lower, of course, loan growth will be lower as well,» Wong said at a briefing for OCBC’s earnings in the first quarter of 2025.

Trade War Risks

In its CEO presentation, OCBC highlighted a number of risks including expectations of a dampened global economy due to volatility from trade tensions and geopolitical risks as well as a more cautious regional growth outlook.

The bank also increased its allowances for loans and other assets by 25 percent to S$212 million with S$118 million attributed to changes in credit risk profiles and management overlays set aside for heightened uncertainties in the macroeconomic environment.