OCBC's net interest margin unlikely to rebound soon after hitting bottom in Q1

Loan growth is expected to languish.

OCBC's management believes that its net interest margin (NIM) have troughed at 1.62% in the first quarter, but analysts warn that the group's NIM isn't in for a quick rebound.

Maybank Kim Eng analyst Ng Wee Siang warned that NIM upside could be constrained by a rollover of currently
higher-yielding trade loans from China.

Ng also reported that OCBC's management have cut loan-growth guidance to mid- from high single digits on back of sluggish domestic loan demand.

"Management expects domestic loans to stay lethargic on a dearth of major projects in Singapore. Short term, a narrowing of on- and offshore spreads may affect the economics of China trade loans. Management expects loan growth to be led by infrastructure projects in the region and non-arbitrage trade loans," Ng wrote.

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