OCBC Bank - Maybank Research 2023-03-10: Great Eastern Has Hiked Earnings Volatility; Waiting For Clarity

• With risk-rewards fairly balanced, downgrade OCBC (SGX:O39) to HOLD with lower target price of S$13.58.
• Tailwinds from China reopening, higher for longer NIMs and high levels of capital puts OCBC in a strong position. Nonetheless, dividend visibility is lower vs a quarter ago given changes to its dividend policy.
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Tapering growth. Lower dividend predictability

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• On the other hand, there is potential for higher wealth management income to flow through from private banking customers looking to introduce more risk to their portfolios. However, timing remains clouded until we see a peak in rate hikes.
• Separately, OCBC has changed their dividend policy from a progressively rising, absolute S$/share payout to a percentage payout. The earlier policy – similar to DBS (SGX:D05) – provided better visibility and indicated a yield floor, which is now absent. See OCBC's dividend history.

Great Eastern increases earnings volatility

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Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @ https://www.ketrade.com.sg/.