OCBC Bank - UOB Kay Hian 2023-11-14: 3Q23 Delivering Consistency In Execution & Resilient Earnings

• OCBC delivered earnings growth of 21% y-o-y in 3Q23, powered by NIM expansion of 21bp y-o-y and growth in net interest income of 17% y-o-y. Loan-loss coverage improved 8ppt q-o-q to 139% after setting aside specific provisions of S$220m despite NPL declining 5.5% q-o-q. CET-1 CAR remains robust at 14.8%.
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OCBC 3Q23 results highlights

• OCBC Bank (SGX:O39) reported net profit of S$1,810m for 3Q23 (up 21% y-o-y and up 6% q-o-q), above our forecast of S$1,726m.

Net interest income hit record high as NIM remains resilient.

• NIM expanded 21bp y-o-y and 1bp q-o-q to 2.27% in 3Q23, driven by rising interest rates. Loans contracted 2% y-o-y but were flat q-o-q (constant currency: +1% y-o-y and +1% q-o-q).
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• Net interest income grew 17% y-o-y to a record high of S$2,456m.

Fee income grew 2% y-o-y and 7% q-o-q in 3Q23.

• Contribution from wealth management increased 9% y-o-y and 8% q-o-q due to increased customer activities. Assets under management (AUM) grew 8% y-o-y to S$270b with positive inflow of net new money.
• OCBC also benefitted from higher credit card fees due to higher customer spend accompanied by the recovery in leisure and business travel.

Growth in other non-interest income.

• Read more at SGinvestors.io.

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-11-14 SGinvestors.io

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