• OCBC 1Q net income had a positive increase, reaching S$1.98 billion from S$1.88 billion in previous year.
• Net interest income, too, shared this positive trend and reached S$2.44 billion, over the estimate of S$2.36 billion.
• Non-interest income saw a notable increase of 17% to reach S$1.19 billion, going above the estimate of S$910.3 million.
• Total income jumped to S$3.63 billion, exceeding the estimate by S$210 million.
• Wealth management fees saw a 20% increase, adding to overall income generation.
• Non-performing loans ratio added a positive note with a dip to 1% compared to 1.1% of the earlier year.
• Common equity tier 1 ratio improved slightly from 15.9% to 16.2%.
• The total capital adequacy ratio retained its previous level of 18.4%.
• Net interest margin showed a small decrease to 2.27% from 2.3% of the previous year.
• The company has allocated S$169 million for allowances for loans and other assets, which is an increase of 54% from the previous year.
• For 2024, it is planning for low single-digit loan growth.
• The company expects a Net Interest Margin (NIM) at the higher end of 2.20% to 2.25% in 2024.
• Credit costs for 2024 is likely to hover between 20 to 25 Bps.
• It has set a dividend payout target ratio of 50% for 2024.
• All strategic initiatives are on track for 2024 objectives.
• Company expects to complete PT Bank Commonwealth Indonesia integration by year end.
• It anticipates key markets in Asia to be resilient as recent economic indicators look favourable. However, near-term risks remain, such as geopolitical volatility.
• 12% of the group loans are deployed to the CRE office sector, and these are largely secured.
• Total credit costs are at an annualized 16bps.
OCBC on Smartkarma
Analyst coverage of OCBC on Smartkarma reveals insights from Daniel Tabbush, indicating a bearish sentiment towards the company. In the research report titled “OCBC – Market Capitalization Rising, Unlike Peers | Insurance Is Lackluster | Credit Costs Seem Low,” Tabbush highlights concerns about OCBC‘s net interest income slowing down significantly, potentially leading to negative surprises in credit costs. Despite OCBC‘s market capitalization increasing by around 4% year-to-date, Tabbush notes that this positive trend is not in line with its peers, such as DBS and UOB, which have experienced declines in market capitalization. The analysis suggests a challenging outlook for OCBC, with areas like insurance profitability and associate profits showing declines.
A look at OCBC Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 3 | |
| Dividend | 4 | |
| Growth | 4 | |
| Resilience | 3 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.8 |
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
Analysts utilizing the Smartkarma Smart Scores have painted a positive long-term outlook for Oversea-Chinese Banking Corporation Limited (OCBC). With a strong score of 4 for both Dividend and Growth, OCBC is seen as a company that not only provides attractive returns to shareholders but also has potential for expansion and development in the future. Additionally, OCBC received a top score of 5 for Momentum, indicating a favorable trend in the company’s stock performance and overall market sentiment.
While OCBC‘s scores for Value and Resilience are slightly lower at 3, the overall picture remains optimistic. The company’s diverse range of financial services, which includes deposit-taking, lending, investment banking, private banking, and more, positions it well to navigate various market conditions and continue delivering value to its stakeholders in the long term.
Summary: Oversea-Chinese Banking Corporation Limited is a comprehensive financial institution offering a wide array of services, ranging from deposit-taking to asset management. With solid scores across dividend, growth, momentum, and resilience, OCBC appears well-positioned for sustained success in the foreseeable future.
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.
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