OCBC Bank - Maybank Research 2023-11-10: Executing Amidst Volatility ~ Growth Slowing, Dividends Resilient.

• OCBC (SGX:O39)'s 9M23 earnings were ahead of MIBG/Street expectations. Largely, this is being driven by NIMs, which are now peaking.
• While NIMs should stay elevated in a higher-for-longer interest rate backdrop, interest income growth is likely to see resistance as loan growth stalls.
• - Read this at SGinvestors.io -
• Nevertheless, we expect OCBC's dividend yields upwards of 6% in 2023-25E supported by strong capital. Maintain HOLD.

Peaking NIMs.

• All of the net interest income (NII) expansion q-o-q was delivered by higher net interest margins (NIM). However, sequential momentum is slowing from a peak of 2.31% in 4Q22 to 2.27% now.
• OCBC's management claims Sep exit NIM is at 2.23% pointing to further slowdown. With most of the loan book already re-priced and credit demand low (loans flat q-o-q), overall margin trajectory could trend downwards going forward.
• - Read this at SGinvestors.io -

NoII prospects remain unclear

• 3Q23 non-interest income remained volatile with weaker insurance and trading.
• Fees were a bright spot, rising +7% q-o-q from better wealth managemet. However, whether this signals a sustained recovery is too soon to say.

Asset quality well supported.

• Read more at SGinvestors.io.

Thilan Wickramasinghe Maybank Research | https://www.maybank-ke.com.sg/ 2023-11-10 SGinvestors.io

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