- OCBC (SGX:O39) recorded 3Q23 net profit of S$1.8bn (+6% q-o-q, +21% y-o-y). This was in line with our and Bloomberg consensus estimates. 9M23 net profit at 75% of our and 76% of Bloomberg consensus full-year forecasts.
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Macroeconomic uncertainties may pressure credit cost
- As macroeconomic uncertainties abound (inflationary pressures, geopolitical uncertainties, interest rate trajectory), OCBC’s management said in its 3Q23 analyst briefing that it will only give its FY24F outlook statement at its 4Q23F earnings update in Feb 2024 when business visibility improves.
- Management added that it had not detected any systemic risks in its portfolio at this point. Its total non-performing assets (NPAs) were lower q-o-q in 3Q23 from the recovery of two sizeable exposures — a real estate exposure in China (classified NPL in 3Q22) and a project-finance-related loan (turned NPL in 4Q21).
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- To this end, we raise our FY23-25F credit cost (calculated based on total allowances) expectations to ~23-25bp (from ~20bp previously; 3Q23: ~25bp) as we bake in the more challenging operating conditions ahead.
1.3x multiplier penalty on operational RWA from MAS removed
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