- OCBC (SGX:O39)’s 1Q23 earnings were ahead of MIBG and Street's forecast. Stronger NIMs, better trading and lower provisions helped.
- Rising funding costs and limited opportunities to grow loans could cause NIM trajectory to turn negative. Fee income, led by wealth management, could provide some offset.
- - Read this at SGinvestors.io -
- We lower target price for OCBC to S$13.19. Maintain HOLD.
Higher NIMs, but falling momentum. Non-interest income recovering
- While NIMs expanded +75bps y-o-y in 1Q23, they fell -1bps q-o-q. Fixed deposits have increased to 43% of total deposits (28% 1Q22). Loan-to-deposit ratio (79.2%) has fallen to a historical low. This could likely pressure NIM trajectory to turn sequentially negative.
- - Read this at SGinvestors.io -
- Slower macro conditions are likely to impact loan demand going forward, we believe. We have lowered loan growth forecast by 1-3% in 2023-25E.
- Fee income saw a 14% q-o-q turnaround. Wealth Management was a key driver and indicates customers are taking more risk. Improved visibility on interest rates should catalyse further growth here, we believe.
Asset quality is a critical known unknown
- Read more at SGinvestors.io.
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.maybanktrade.com.sg/.
Thilan Wickramasinghe Maybank Research | https://www.maybank-ke.com.sg/ 2023-05-10
Read also Maybank's most recent report:
2024-11-09 OCBC - Delivering, But Need Clarity.
Previous report by Maybank:
2024-08-02 OCBC - Delivering On Strategy; Dividend Visibility Despite Rising Rate Cut Risks.
Price targets by 4 other brokers at OCBC Target Prices.
Listing of research reports at OCBC Analyst Reports.
Relevant links:
OCBC Share Price History,
OCBC Announcements,
OCBC Dividends & Corporate Actions,
OCBC News Articles
