OCBC Bank    Last:16.2   -

OCBC

OCBC reported 3Q06 net profit of S$379m, up 7% yoy.  It is also up 21% qoq when compared against 2Q06's adjusted S$314m (after excluding one-time divestment gains of S$482m).  3Q06 earnings were above our expectations of S$315m primarily due to improved investment performance of GEH's non-participating funds.  

Outperformance in net interest income when compared against peers.  Net interest income rose 15% yoy and 9% qoq.  This is stronger than the sequential growth of 1.7% for DBS and 1.9% for UOB.  Net interest margin of 2.06% is 6 bp wider than 2Q06's 2.00%, and 23 bp wider than 3Q05's 1.83%.  Better loan yields in Singapore, Malaysia and Indonesia and higher yields from interbank placement more than offset the rise in borrowing costs. OCBC's increase of its Singapore home mortgage rates in 3Q06 (for certain tranches) would have helped to raise its loan yields.

Non-interest income was up 11% (S$36m) yoy, due to strong income from insurance (+S$28m yoy) and fee & commission income (+S$24m yoy), but partly offset by losses in securities and derivatives dealing (-S$22m yoy).  Non-interest income was lower sequentially due to substantial one-off divestment gains in 2Q06.

Significant sequential improvement in cost-income ratio.   Cost income ratio of 40% was lower than 2Q06's adjusted 45.6% (adjustment for one-time gains).  It is close to 3Q05's 40.5%.  Considering the cost pressures as experienced by peers, OCBC has performed well in cost control.

Asset quality has improved further.  NPL ratio of 3.3% is lower than Jun 06's 3.6%, with the improvement coming from all geographical segments.  Loan loss coverage has risen to 97%, from Jun 06's 94%, further reflecting the strength of OCBC's balance sheet.  

No dividends declared.

BUY.  The positive set of results reinforce our BUY call on OCBC.  We also expect OCBC's future earnings to benefit significantly from its aggressive regional expansion.    

 

I sold my OCBC share to take profit at $7.10 this morning.  At noon time, the price is $7.05.  I think the price will retreat to below $7.00. As it's in the nature course of things, the bullish sentiments will soon dampen as the market enters a phase of correction.

 

    I expect OCBC to break May's high of $7.15 anytime now.

 

Hi Nos,

as you where expecting, OCBC really march forward step by step..
too bad I've de-vest before it reach $7, was anticipated some correction last week when you look at the outlook.... but now the story is totally diff.

 

OCBC outperformed DBS and UOB in the rally last week. Credit Suisse believe this was a case of the laggard catching up, rather than any change in fundamentals.

 

good to see so many strong believer here

Happy Trading & mid-Autumn Festival

中秋节快乐!!!!

 

I'm a strong believer for this strategy

 

   Someone once suggested a strategy for investing in heavy weight stocks like OCBC, UOB and DBS. "Buy a fixed number of lots, based on your budget, every 6 months (say 1st trading day of Jan and Jun) over a period of 10 years. Do not sell during this time, no matter how good or how bad the market may be." He says you will expect to see a minimun 10% compound annual increase (inclusive of dividend payments) in the worth of the shares at the end of that 10 year period. That means the shares will worth more than double after 10 years. Anyone think this will work out? Possible to do a simulation based on data available from SGX?   

 

Hi YongJiu,

Breaking $7 is possible, but I think it'll move up slow and steady.

 

will break $7 today?

 

Hi Nostradamus,

I would like to seek for your quick opinion on OCBC.
what do you think for it "chiong" to $7 and above?

are you positive abt the coming friday US report?

thnx

 

Data from the Monetary Authority released on Friday showed that commercial bank lending in August rose to $193b from $180b a year earlier, as loans to businesses grew to $101b during the month from $89b. Lending to the building and construction sector grew to $27b  from $23b previously.



OCBC rose the most as it has underperformed the other 2 banks.

 

Anyone know why OCBC has been rising ?

 

This counter TA trend change direction upwards now???

TA experts, appreciate your comments.

 

OCBC is on downtrend now.

 

Daiwa Institute of Research has raised its target price to $6.50 given better prospects for loan growth. Daiwa is, however, keeping its "hold" call on the stock.



The brokerage expects annual domestic loan growth to average 7.1%over 2006-2010, up from average growth of 1.9% between 1998 and 2005.



"The implications of a five percentage-point increase in the growth of the domestic credit market over the next five years are clearly positive for the underlying earnings growth of the Singapore banks," Daiwa said in a note to clients.

 

third round of share buyback, another sgd 500 million ??

 

i think OCBC price will not significantly change for the next few weeks. even if it does, i believe that the price will downtrend. the A/D and RSI has been dropping for more than 2 months now.

 

Now OCBC at $6.80 and heard they are giving very good dividend in May. Advise ?