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Loan Breakdown for 3 Singapore banks
DBS OCBC UOB
1Q07
- Transportation, Storage & Comms 9.7% 4.1% 5.2%
- Building & Construction 11.2% 15.6% 10.3%
- Manufacturing 13.1% 8.7% 11.6%
- Financial Institutions 13.3% 16.0% 15.7%
- General Commerce 9.2% 9.1% 14.3%
- Professionals & Pte Individuals 9.1% 11.3% 12.7%
- Housing 26.9% 28.4% 24.3%
- Others 7.6% 6.9% 6.0%
Total 100.0% 100.0% 100.0%
UOB KH
HLF & OCBC are key beneficiaries of expansion in building and construction loans.
As of May 07, loans to the building and construction segment expanded a robust 19% yoy, reflecting improving loan demand by developers and construction firms. This segment now has a 14.7% share of total loans. We believe HLF (BUY / Target Price of S$5.00) is a key beneficiary as 40% of its loans is to the SME segment, and the bulk of HLF SME customers are in property-related businesses. Amongst the 3 banks, OCBC (BUY / Target Price of S$10.80) has the highest percentage loan exposure of 15.6% to the building and construction sector, and is therefore likely to benefit.OCBC Bank will spend more than S$150m to renovate its entire branch network in Singapore and Malaysia. The 18-month project aims to win over non-customers and deepen the connection with existing customers.
Phillip Securities Quarterly Outlook
Our top pick remains as
Thus we forecast OCBC will report the highest growth in quarterly earnings of 7.06% to S$546 million as compared to
OCBC. The last discussion with OCBC reflects that a fall in SIBOR bodes well for the bank that as a larger proportion of deposits that are sensitive to SIBOR as compared to loans. In addition, its non-interest income contributes a larger proportion of the operating income as compared to the other two local banks. DBS?s earnings growth of 3.9% and UOB?s earnings growth of 6.76%.All 60 branches in Singapore and 29 branches in Malaysia will get a makeover. The transformation, which will take 18 months, is aimed at winning over non-customers and deepening the connection with people who already bank with OCBC, bank officials said at a press conference yesterday.
'More customers are going to branches now,' said Andrew Lee, head of group consumer financial services at OCBC. 'Machines cannot have a dialogue with you about your finances.'
Starting with the Ang Mo Kio hub and Specialists' Centre branch in Singapore, and one branch in Bukit Damansara in Kuala Lumpur, the rejuvenation will take place progressively at other branches, with Whitesands the next to be revamped.
Since the new Ang Mo Kio branch opened a month ago, customer traffic is said to have doubled to 1,000 on a weekday. Sunday banking would see more families and boost the customer traffic to about 2,000.
The new branches feature more campaigns, freebies, promotions, and product info to entice customers. Front-line staff will have new uniforms, not unlike those of airline cabin crew.
Technology has been upgraded, with new cash counting machines, called Teller Assist Units, which display the sum banked in by a customer.
The remodelled branches in Singapore and Malaysia will form the base for how the bank's branches in China will look like, Mr Lee said.
The rejuvenation will not be confined to branches, Mr Lee said. 'Our website and Internet banking channels will also be revamped,' he said. 'Repetitive transactions like paying bills can be done on Internet.'
The branches are for customers who need to talk to the bank, he said. OCBC is still investing in mobile banking, which it launched to much fanfare last year.
The last time OCBC branches saw a remodelling effort on this scale was in early 2000, where OCBC and Keppel Tat Lee branches were renovated after OCBC bought over Keppel Tat Lee.
In another development, following this week's introduction by Citibank of a credit card with a $500 spending limit, Mr Lee announced that at the end of the third quarter, OCBC would start offering a card with a similar limit, through tie-ups with strategic partners like Ikea, Robinsons and NTUC
The potential gains will filter directly to OCBC's balance sheet fair value reserves and not pass through OCBC's P&L.
Should see some responses on the OCBC's share price, but may not be signifcant until 8 Aug when quarterly report is announced.
Hey guys...
The share price of Ningbo Bank surged from its IPO price of 9.20 yuan to 20.38 yuan double of its IPO price. What will the impact of this surge be on OCBC's share price??
OCBC currently owns about 10% of Ningbo Bank. Ningbo just made its listing on the ShenZhen stock exchange today...
to generate higher share value.
with lesser share, the EPS will be higher.
Share Buy Back
17 Jul 07 - 20,900 @ $9.40
16 Jul 07 - 20,000 @ $9.45
OCBC had completed 20,900 share buy back at $9.40 on 17 July 2007.
China's Ningbo Bank sees strong H1 profit growth
SHANGHAI, July 18 (Reuters) - Bank of Ningbo, partly owned by Singapore's Oversea-Chinese Banking Corp.
Bank of Ningbo, based in the eastern Chinese city of Ningbo near Shanghai, said in a statement published on major Chinese securities newspapers that the company posted a net profit of 272 million yuan ($35.97 million) for the first half of 2006.
The Bank of Ningbo projected it will earn 383 million yuan in the first half of 2007, according to the statement.
The forecast results were unaudited, it said.
Bank of Ningbo said on Monday it had settled its IPO price at 9.2 yuan apiece to raise 4.14 billion yuan from the sale of 450 million shares.
The bank's listing on the Shenzhen Stock Exchange begins on Thursday.
UOB Kay Hian - BUY
TP - $10.80
Bank of Ningbo will be listed as a Shenzhen A-share. Based on the IPO price of Rmb 9.2 per share and the post-IPO capital of 2.5b shares, the base-case market capitalisation works out to Rmb 23b (or S$4.6b).
In 2006, OCBC paid S$120m for a 12.2% stake in Bank of Ningbo. The offer shares amounted to 18% of the post-IPO capital, and OCBC?s stake in Bank of Ningbo will dilute to 10% post-IPO. The value of this 10% stake is S$460m using the base-case mentioned above.
OCBC could therefore record a gain of some S$340m (S$460m less S$120m) from the IPO. The potential gains will however, filter directly to OCBC?s balance sheet fair value reserves and not pass through OCBC?s P&L.
The value accretion to OCBC will equal to some 11¢ per OCBC share, based on OCBC share capital of 3,127m shares. This is marginal relative to OCBC?s NTA of S$3.18 per share. However, if Bank of Ningbo share price rises sharply above IPO price upon listing, the positive impact on OCBC would be much more significant.
Maintain BUY.
However, we continue to like OCBC due to its greater exposure to faster-growing economies. Valuation wise, OCBC also trades at a lower P/NTA (compared with DBS), after adjusting for the unrealised revaluation surpluses. Our OCBC target price of S$10.80 is pegged to 2.8x multiple over 2007 RNTA (excluding revaluation surpluses from Great Eastern Holdings), which is not excessive as OCBC traded at 2.6x P/B back in 1999/2000 when it was less aggressive on regionalisation.Expected report to be release on 8/8/07.
This time "Huat" liao.
Credit Suisse:
Singapore is at the start of a new credit cycle, with banks starting to benefit from the upswing in construction activities. Singapore domestic SGD loans grew at a robust 10.1% YoY in April, with business loans (+16% YoY) behind the momentum. Construction loans were the biggest driver, with growth of 26.7% YoY. A strong property market and integrated resort-related construction activity are expected to continue to support credit growth, offsetting the negative impact of a lower SIBOR on banks' net interest margins. Singapore banks are trading at attractive valuations of between 1.8x and 2.2x price-to-book, for sustainable ROEs of about 14%. We recommend DBS Group (DBS SP, BUY) and OCBC (OCBC SP, BUY).
Start to consolidate now.
Q2 report is going to be within or slightly exceed target.