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By Yantoultra Ngui
SINGAPORE (Reuters) -Singapore's second-largest bank, Oversea-Chinese Banking Corp, on Wednesday joined rivals in declaring multi-billion capital returns alongside their 2024 record earnings but warned of an uncertain global outlook from tariffs and trade tensions.
Global growth and trade activities could be impeded by U.S. President Donald Trump's trade tariffs and heightened trade tensions, but Southeast Asia's economies are likely to remain resilient, OCBC's Group CEO Helen Wong said in a briefing.
"We are committed to continue to grow our business, stay through the uncertainties," she said after OCBC posted a smaller-than-expected rise in fourth quarter profit and unveiled a S$2.5 billion ($1.87 billion) capital return.
OCBC was the only bank to miss forecasts in an otherwise strong fourth quarter earnings season for Singapore banks, which are also Southeast Asia's largest by asset size.
Shares of OCBC dropped as much as 2.8% in early trade Wednesday, underperforming the domestic benchmark index and peers that were relatively flat or slightly higher.
The lender projected 2025 percentage loan growth in mid-single digits versus 8% achieved in 2024, which exceeded its target of low single-digit growth due to better performance in the fourth quarter, according to Wong.
The bank also expected its 2025 net interest margin, a key profitability gauge, to weaken to around 2% from 2.2% in 2024 on expectation of three rate cuts from the U.S Federal Reserve this year, Wong said.
Seperately, OCBC would defer its plan to redevelop its Chulia Street property situated in the city-state's central business district, Wong added.
OCBC's capital return announced on Wednesday comprises special dividends amounting to 10% of its 2024 and 2025 net profit, with the balance via share buybacks over two years.
OCBC, which is also Southeast Asia's second largest lender, said October-December net profit climbed 4% to S$1.69 billion from S$1.62 billion a year earlier, mainly on higher non-interest income boosted by better fee, trading and insurance income.
The better performance, however, missed the mean estimate of nearly S$1.81 billion from five analysts polled by LSEG.
Larger peer DBS Group posted on February 10 a 10% year-on-year jump in fourth-quarter net profit and announced a dividend capital return plan.
On February 19, smaller rival United Overseas Bank posted a 9% rise in fourth-quarter net profit and announced a S$3 billion package to return surplus capital to investors.
Shares of both banks touched record highs following their earnings releases.
Growth could take a hit this year as Trump's trade tariffs and other policies threaten to undermine the global economy, analysts say.
"The view is that Singapore is likely to be relatively insulated from direct U.S tariffs due to its trade position with the U.S," said Yeap Jun Rong, market strategist at trading platform IG.
"However, any indirect impact on key trading partners, such as China and the Eurozone, could still affect the local economy."
($1 = 1.3355 Singapore dollars)
(Reporting by Yantoultra Ngui; Editing by Jamie Freed, Sonali Paul and Shri Navaratnam)
