- OCBC‘s Q4 net income rose by 12% year-on-year (y/y) to S$1.62 billion, but missed the estimated S$1.71 billion.
- Net interest income increased by 3.2% y/y to S$2.46 billion.
- Non-interest income saw a significant rise of 26% y/y to S$811 million.
- Total income grew by 7.9% y/y to S$3.27 billion, falling short of the estimated S$3.39 billion.
- Wealth management fees surged by 40% y/y to S$195 million.
- The ratio of non-performing loans dropped from 1.2% to 1% y/y.
- The common equity tier 1 ratio went up to 15.9% from 15.2% y/y.
- Total capital adequacy ratio increased to 18.1% from 17.7% y/y.
- Tier 1 ratio rose to 16.5% from 15.9% y/y.
- Net interest margin decreased slightly to 2.29% from 2.31% y/y.
- Allowances for loans and other assets reduced to S$187 million from S$314 million y/y.
- For the year 2023, OCBC‘s net income was S$7.02 billion, a rise of 27% y/y, but missed the estimate of S$7.12 billion.
- The final dividend per share for 2023 was S$0.42, up from S$0.40 y/y.
- For the year 2024, OCBC anticipates a return on equity (ROE) between 13% to 14%, and a net interest margin (NIM) in the range of 2.20% to 2.25%.
- The bank expects low single-digit loan growth and credit costs between 20 to 25 basis points in 2024.
- OCBC plans to maintain a 50% dividend payout ratio target in 2024.
- OCBC predicts a global growth slowdown in 2024 but expects Asia to perform better.
- Interest rates are likely to trend downwards from the second half of 2024.
- Global inflation is expected to remain sticky in the near term.
- Loans to the commercial real estate (CRE) office sector make up 12% of OCBC‘s group loans, with two-thirds in key markets of Singapore, Malaysia, Indonesia, and Greater China.
- OCBC has expanded its Greater China Business Offices network in ASEAN with a new branch in Central China.
- CEO Helen Wong reaffirms OCBC‘s commitment to its ASEAN-Greater China growth strategy, believing that Asia holds immense growth potential.
OCBC on Smartkarma
OCBC, one of the top banks in Singapore, is receiving attention from independent analysts on Smartkarma, an investment research network. One analyst, Daniel Tabbush, has published two reports on OCBC‘s performance and potential risks. Tabbush suggests that OCBC‘s market capitalization has been rising, in contrast to its peers DBS and UOB, which have seen a decline. However, Tabbush also points out that OCBC‘s net interest income may slow down, and other areas, such as credit costs and insurance profits, are not showing strong performance.
Tabbush also highlights potential concerns for OCBC in his second report, which focuses on the bank’s upcoming results release. He believes that credit metrics could underwhelm and that OCBC‘s insurance operations have been weakening. In the past two quarters, OCBC has seen a significant increase in credit costs, and it holds a significant portion of its loans in Greater China’s commercial real estate sector, which has shown signs of deterioration for other banks. Great Eastern Holdings, OCBC‘s insurance arm, has also seen a decline in profits due to worsening policy claims. Tabbush advises investors to pay attention to these potential risks when considering OCBC‘s performance and future prospects.
A look at OCBC Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 3 | |
| Dividend | 4 | |
| Growth | 4 | |
| Resilience | 4 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 4.0 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
According to the Smartkarma Smart Scores, OCBC has a positive long-term outlook. The company has received a score of 3 for value, indicating that it is considered a good value for investors. Additionally, OCBC has scored a 4 for both dividend and growth, suggesting that the company is expected to provide stable dividends and has potential for future growth. Furthermore, OCBC has scored a 4 for resilience, indicating that it is well-positioned to weather any potential challenges in the market. Finally, OCBC has received a top score of 5 for momentum, suggesting that the company is performing well and has positive momentum going forward.
Overall, OCBC is a comprehensive financial services company, offering a wide range of services including deposit-taking, lending, investment banking, and more. With its positive Smartkarma Smart Scores, OCBC is poised for success in the long-term. Investors can have confidence in the company’s value, dividend, growth potential, resilience, and momentum, making OCBC a strong choice for their portfolios.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
Have feedback on this article? Concerned about the content? Get in touch with us directly.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
