OCBC (SGX:O39) reported net profit of S$1,710m for 2Q23 (up 34% y-o-y but down 9% q-o-q), which is in line with our forecast of S$1,722m. See OCBC's announcement dated 04 Aug 2023.
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Fees down 10% y-o-y and 5% q-o-q. Wealth management fees dipped 16% y-o-y and 5% q-o-q due to subdued customer activities as market sentiment remains fragile. OCBC attracted net new money of S$6b in 2Q23 and AUM increased 10% y-o-y to S$274b. Loan-related fees also receded 4% y-o-y.
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Operating expenses were tightly controlled and increased slightly by 2% y-o-y in 2Q23. Staff costs increased 10% y-o-y but other expenses were cut by 22% y-o-y. Cost-to-income ratio (CIR) was healthy and stable at 38.5%.
Sizeable general provisions improved loan loss coverage by 10ppt q-o-q. NPL balance eased 2% q-o-q in 2Q23 due to upgrades and recoveries from Singapore, Malaysia and Indonesia. NPL ratio was unchanged at 1.1%. OCBC incurred sizeable general provisions of S$200m due to risk migration, including commercial real estate in developed markets, and changes to macro-economic variables. Credit costs were elevated at 31bp in 2Q23 but loan loss coverage improved 10ppt q-o-q to 131%.
Delivering committed payout. The board has declared interim dividend of 40 cents, an increase of 43% y-o-y and in accordance with payout ratio at 50%. See OCBC's dividend date.
OCBC management's guidance for 2023
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Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
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