OCBC Bank - RHB Invest 2024-01-29: 4Q Results Should Not Surprise But Dividends May

• OCBC Bank (SGX:O39) will announce its 4Q23 results on 28 Feb (see earnings calendar). We expect OCBC's FY23 results to meet our and consensus estimates.
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• A peaking rates cycle will likely lead to income pressures and dampen share price performance of Singapore banks under coverage. However, decent dividend yield should provide downside support.

Loans growth trends sustained into 4Q

• Loans growth trends sustained into 4Q, with weakness in trade-related loans cushioned by stable mortgage and non-trade corporate lending.
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Healthy liquidity to cushion year-end competition.

• On deposits, OCBC has seen some seasonal competition but ample liquidity (3Q23 LDR: 79.7%) allowed it to run off some of the costlier fixed deposits to keep funding cost pressures manageable.
• Recall that 3Q/9M23 NIM of 2.27% and 2.28% were trending ahead of the ~ 2.25% guidance. OCBC had guided for a weaker 4Q NIM q-o-q on muted loans growth, deposit competition and lower exit NIM (of 2.23%) – all of which appear to have shaped up as expected.

Some seasonal softness on wealth management activities

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Singapore Research RHB Securities Research | https://www.rhbgroup.com/ 2024-01-29 SGinvestors.io

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